Share with your friends

India: Tax treatment of advertising payments, intellectual property rights, reimbursements

India: Tax treatment of advertising payments, other

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


Related content

  • Payments by television channel entity to advertising agencies: The Supreme Court of India held that payments made by a taxpayer to advertising agencies were payments of “commission” and as such, the taxpayer was required to withhold (deduct) tax at source on making payments to the advertising agencies. The Supreme Court observed that the relationship between the taxpayer and the agencies was that of a principal and agent, and that under the terms of the agreement, both parties intended for the amount paid by the taxpayer to the agencies to be a payment of commission and specifically used the term “commission” in the agreement. The case is: Prasar Bharti. Read an April 2018 report [PDF 675 KB]

  • Payment for intellectual property rights: The Mumbai Bench of the Income-tax Appellate Tribunal held that the payment of a royalty for intellectual property rights to a U.S. entity is taxable in India. The tribunal observed that although the taxpayer was a U.S. corporation, it was also a tax resident of India. In this case, the patent and copyrights were used by the taxpayer’s holding company in India for the manufacture of products that were sold in the United States. The case is: Dorf Ketal Chemicals LLC. Read an April 2018 report [PDF 554 KB]

  • Reimbursement of “lease line charges” with no income element: The Pune Bench of the Income-tax Appellate Tribunal held that the reimbursement of expenses by the taxpayer to its U.S. parent company did not include an income element and, therefore, was not subject to tax in India. The expenditure allocated by the U.S. company to the taxpayer was charged on a cost-to-cost basis, and as such, there was no income element and no requirement to withhold tax on the payments. The case is: T3 Energy Services India Pvt. Ltd. Read an April 2018 report [PDF 457 KB]

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in 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.

Connect with us


Want to do business with KPMG?


loading image Request for proposal