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


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