• Service: Tax, Global Indirect Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 10/15/2013

India - Shrink-wrapped software, country-of-source taxation, proposed REIT regulations 

October 15:  The KPMG member firm in India prepared reports on the following developments (read the October 2013 reports by clicking on the hyperlinks provided below):
  • Payments on license granted for using shrink-wrapped software taxable as royalty income - The Mumbai Bench of the Income-tax Appellate Tribunal held that payments made for use of shrink-wrapped or off-the-shelf software are taxable as royalty income under the Income-tax Act, 1961 and various tax treaties. The tribunal concluded that (1) a license granted allowing use of the copyright of shrink-wrapped software was a transfer of a right to use the copyright; and (2) the non-resident supplier was supplying software as a part of equipment purchased but as stand-alone software under an end-user license agreement.

    The case is: Reliance Infocom Ltd. Read an October 2013 report [PDF 457 KB]

  • “May be taxed” under Oman and Qatar income tax treaties authorizes country of residence to tax the income earned in the country of source - The Mumbai Bench of the Income-tax Appellate Tribunal held that the phrase “may be taxed” in the India-Oman income tax treaty and India-Qatar income tax treaty indicates that the source country of the income has a right to tax without affecting the resident country’s right to tax. Thus, income earned in the source country is included in taxpayer’s total income subject to tax in India. Relief may be available under the tax credit method of the tax treaties.

    The case is: Essar Oil Ltd. Read an October 2013 report [PDF 460 KB]

  • Draft REIT regulations released for public comments - India’s Securities and Exchange Board announced a revised proposal to introduce real estate investment trust (REIT) regulations. Comments concerning the proposed REIT regulations are due by 31 October 2013.

    Read an October 2013 report [PDF 453 KB]

  • Amnesty to resolve export obligation defaults - India’s Directorate General of Foreign Trade issued a notice to allow exporters to close cases relating to export obligation defaults. In general, the default can be resolved by payment of an amount of customs duty corresponding to the shortfall in export obligation along with interest (equivalent to customs duty paid).

    Read an October 2013 report [PDF 391 KB]

  • Long-term capital gain on off-market sale of listed shares by non-residents, taxable at 10% rate - The Delhi High Court held that non-resident sellers are eligible for the lower rate of 10% on capital gains realized on the sale of listed shares.

    The case is: Cairn UK Holdings Ltd. Read an October 2013 report [PDF 444 KB]

  • India’s Supreme Court finds taxpayer is not entitled to additional interest on interest paid on refund - India’s Supreme Court held that only statutory interest under section 244A may be claimed by the taxpayer, and that no additional interest on such statutory interest (i.e., interest on interest) is available.

    The case is: Gujarat Fluoro Chemicals Ltd. Read an October 2013 report [PDF 378 KB]

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