India: Income from providing access to software not taxable as royalty
Delhi High Court decision
Not taxable as royalty
The Delhi High Court held that income received by a UK-based entity for providing access to computer software is not taxable as royalty income under provisions of the Income-tax Act 1961 or under provisions of the India-UK income tax treaty.
The decision concludes that to tax such payments as royalty, it is necessary to show a transfer of a copyright in the software.
In the instant case, the Indian entity merely received a right to use the software produced by the UK-based entity from third-party vendors—these rights did not create any right to transfer the copyright in the software.
Read a December 2021 report [PDF 296 KB] prepared by the KPMG member firm in India
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.