• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 8/27/2013

India - Internet advertising purchases not creating permanent establishment 

August 27: The KPMG member firm in India prepared reports on the following developments (read the August 2013 reports by clicking on the hyperlinks provided below):
  • Purchases by Indian company of advertising space from foreign company on foreign websites did not create PE under the India-United States tax treaty - The Mumbai Bench of the Income-tax Appellate Tribunal held that purchases of advertising space on foreign websites by an Indian company, from a foreign holding company, did not constitute a permanent establishment (PE) under the India-United States income tax treaty. The tribunal found the transactions between the Indian taxpayer and the U.S. company were at arm’s length; that the parties conducted their business independently; and that the similarity of business activity does not indicate that the taxpayer was acting or doing business on behalf of the U.S. company.

    The case is: Pubmatic India Pvt Ltd. Read an August 2013 report [PDF 445 KB]

  • No withholding tax required on amounts of service tax that is imposed on fees for technical/professional services - The Rajasthan High Court held that withholding tax is not required on amounts of service tax that is levied on fees for technical/professional services paid to consultants. The High Court affirmed a tribunal’s findings, and concluded that under the terms of the agreement, the amount of service tax was to be paid separately and was not included in the fees for technical / professional services. Therefore, the amount of service tax was not subject to the withholding tax provisions.

    The case is: Rajasthan Urban Infrastructure Development Project. Read an August 2013 report [PDF 197 KB]

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