India: Activities constituting PE under tax treaty with Norway; treaty benefits on company’s re-domiciliation

Reports about recent tax developments in India

Reports about recent tax developments in India

The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below).

  • Interconnected services under a unified agreement to determine permanent establishment (PE): The Delhi Bench of the Income-tax Appellate Tribunal held that the activities constituted a permanent establishment (PE) in India pursuant to the India-Norway income tax treaty. In this case, there were interconnected services under a unified agreement, and different services involved various activities such as sourcing, marketing, ITeS, and others (activities consisting of “interconnected projects”). Therefore, the duration threshold of the employees who performed these services was met under Article 5(2)(I) of the income tax treaty. The case is: Telenor ASA. Read an August 2021 report [PDF 320 KB]

  • Methodology to compute exempt income of specified funds: The Central Board of Direct Taxes (CBDT) issued guidance prescribing new rules under the methodology to compute exempt income of a specified fund for the purposes of Section 10(4D). Similarly, Rule 21AJ provides for the methodology to determine the income of a specified fund attributable to units held by non-residents under Section 115AD(1A). Read an August 2021 report [PDF 275 KB]

  • Eligibility for benefits under India-Mauritius income tax treaty on re-domiciliation: The Mumbai Bench of the Income-tax Appellate Tribunal addressed eligibility of benefits under the India-Mauritius income tax treaty on “re-domiciliation” of the taxpayer. The tribunal held that a company’s re-domiciliation would not result in the denial of treaty benefits of the country where the company re-domiciled. The tribunal also addressed the issue of the existence of a PE in India and found the taxpayer did not have any place at its disposal in India and that its presence in India was only through its agents. The case is: Asia Today Limited. Read an August 2021 report [PDF 345 KB]

 

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