rocket
Introducing the Orbitax International Tax Platform, a revolutionary suite of integrated tax solutions including research, compliance, calculations, entity management and charting. Find out more.
News Share

The Tax Hub

Daily Tax Newsletter

India-Indonesia-Ireland-United Kingdom-United States

Responsive image

Indian Tax Tribunal Holds that No Tax is Due on Payments for Taxation and Audit Services Provided Overseas

The Mumbai Income Tax Appellate Tribunal recently issued a decision on whether payments for services rendered overseas are subject to withholding tax in India. The case involved an Indian accounting firm, BSR & Company (BSR).

In the year concerned, BSR made payments for taxation and audit services to service providers in Ireland, Indonesia, the UK and the U.S., which amounted to approximately INR 7.8 million. Because the services were rendered overseas, BSR determined that it did not need to withhold any tax on the payments. However, in auditing the return, the assessing officer determined that the payments were fees for technical services (FTS), and that tax should have been withheld. Since no tax was withheld, the deduction of the payments was disallowed. BSR appealed.

In its decision, the Income Tax Appellate Tribunal sided with BSR. Regarding the payments to the U.S. providers, the tribunal looked at Article 12 (Royalties and Fees for Included Services) of the India-U.S. tax treaty, and found that the service payments could not be considered FTS because there was no evidence to establish that any technical knowledge, skill, etc. had been made available to BSR through the rendering of the services. Since the payments could not be considered FTS and the providers had no permanent establishment in India, no withholding tax was due.

Regarding the payments to the Indonesian, Irish and UK providers, the Tribunal determined that the payments should fall under the articles on independent personal services of the respective treaties between India and those countries. In general, the articles require that the service provider have a permanent establishment in India for service payments to be taxable in India. Since none of the providers had a permanent establishment in India, no withholding tax was due.

The decision of the Tribunal may be further appealed by the tax authorities.

Powerful Tax Tools

NEW

FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.

NEW

Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.

NEW

Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.

NEW

Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.

NEW

Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.

NEW

OECD BEPS Project

Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.

NEW

Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.

NEW

Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

NEW

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

NEW

Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.

NEW

Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.

NEW

Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.

NEW

VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.

NEW

NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.

NEW

Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.

NEW

Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

FX Rates

Global FX Rates including Tax year Average FX Rates and Spot Rates for all Reporting Currencies.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More