India: Tax treatment of subscription fees for online databases and journals, tax treaty implications

The KPMG member firm in India has prepared reports about recent tax developments

The KPMG member firm in India has prepared reports about recent tax developments

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

  • Subscription fees for online databases and journals not taxable as royalties under tax treaty with United States: The Mumbai Bench of the Tribunal—in a case concerning the tax treatment of income from providing access by subscription to online databases and subscription revenue from online journals—held that these services did not result in transfer of copyright and that income from these services was not taxable as royalty under Article 12 of India-United States income tax treaty. The case is: American Chemical Society. Read an October 2021 report [PDF 324 KB]

  • CBDT guidelines on borrowed funds invested in India by sovereign wealth funds and pension funds: The Central Board of Direct Taxes (CBDT) issued guidelines clarifying the term “indirectly” for purposes of claiming an exemption for sovereign wealth funds and pension funds (i.e., specified funds). Read an October 2021 report [PDF 280 KB]

  • Taxpayer eligible for foreign tax credit related to exempt income in India under tax treaty with Japan: The Delhi Bench of the Tribunal dealt with the issue of eligibility of Foreign Tax Credit (FTC) when the taxpayer's income was exempt in India. The Tribunal held that the taxpayer is eligible for FTC on the entire amount of taxes withheld in Japan under the India-Japan income tax treaty. The case is: Canon India Pvt. Ltd. Read an October 2021 report [PDF 340 KB]

  • Export commission not taxable as “fees for technical services” by invoking “most favoured nation” clause under tax treaty with France: The Delhi Bench of the Tribunal held that an export commission paid to an agent in France was not taxable as “fees for technical services” under the India-France income tax treaty by invoking the “most favoured nation” clause. The case is: Aggarwai v. DCIT. Read an October 2021 report [PDF 341 KB]

  • IT support services provided by foreign entities held to be standard automated services, not taxable as “fees for technical services" under India’s tax law: The Delhi Bench of the Income-tax Appellate Tribunal dealt with the issue of taxability of IT support services provided by nonresident entities for standard connectivity and networking services. The Tribunal held that standard automated services received over internet are not taxable as Fees for Technical Services since there is no human intervention in the supply of such services. The case is: Hitachi Metglas (India) Pvt. Ltd. Read an October 2021 report [PDF 321 KB]

  • Income from Indian investment by UAE-based settlor through Jersey-based trust not taxable under tax treaty with UAE: The Bombay High Court rejected the ruling of the Authority for Advance Ruling (AAR) and held that income earned from Indian investment by UAE-based settlor through a Jersey-based trust was not taxable in India by virtue of exemption provided under Article 24 of the India-UAE income tax treaty. The case is: Abu Dhabi Investment Authority. Read a November 2021 report [PDF 328 KB]

 

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