Global

Details

  • Service: Tax, International Corporate Tax, International Executive Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 7/10/2012

India - Fees paid to test exports; expatriates’ pension exemption 

July 10:  The KPMG member firm in India has prepared reports on the following developments (read these July 2012 reports by clicking on the hyperlinks provided below):
  • Testing and certifications fees of exported products are “fees for technical services” under the Income-tax Act: The Delhi High Court held that the fees for testing and certification of exported products paid to a U.S. company are treated as “fees for technical services” under the Income-tax Act, 1961. The High Court overturned a decision of the Delhi Income-tax Appellate Tribunal, to find that:

    • Given that the export activity took place or was completed in India, the source of income was thus sourced in India
    • Mere payment of export proceeds from persons outside India did not make these persons the source of income

    The High Court remanded the matter back to the tribunal for examining taxability of the fees under the India-United States income tax treaty.

    The case is: Havells India Ltd. Read a July 2012 report [PDF 204 KB]


  • Exemption from provident fund contribution for certain expatriate employees: In October 2008, India amended the Employees’ Provident Funds Scheme, 1952 and Employees’ Pension Scheme, 1995 by bringing “international workers” into India’s social security regime. Consequently, foreign nationals working in an organisation covered under the Employees’ Provident Funds and Miscellaneous Provisions Act were required to pay provident fund contributions. However, certain expatriate employees were exempted from provident fund contributions in India if certain conditions applied. These employees were defined as “excluded employees” under the provident fund regime.

    Recently, India’s Ministry of Labour and Employment issued guidance that expands the scope of “excluded employee.”

    Read a July 2012 report. [PDF 197 KB]



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