• Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 11/11/2013

India - Tax treatment of services rendered outside India 

November 11: The KPMG member firm in India prepared reports on the following developments (read the November 2013 reports by clicking on the hyperlinks provided below):
  • Income for services rendered outside India not taxable in India, and there was no requirement to withhold tax (even under retroactive application of tax law changes) - The Mumbai Bench of the Income-tax Appellate Tribunal held that income received for services (technical designs and drawings), rendered by a UK company to a taxpayer outside India, is not “chargeable to tax” in the hands of the UK company in India, and there is no requirement to withhold (“deduct”) tax on the payment for the services (even in light of retroactive changes made to the tax law by the Finance Act, 2012, because it would not be possible for the taxpayer to withhold tax after changes had been made to the tax law and following the time payments were made).

    The case is: New Bombay Park Hotel Pvt. Ltd. Read a November 2013 report [PDF 493 KB]

  • Income from time charter of ships between Indian ports is taxable as royalty - The Madras High Court held that income from time chartering or “use of ship” between the ports in India constitutes a royalty under Section 9(1)(vi) of the Income-tax Act, 1961 and relevant income tax treaties. The High Court based its conclusion on a finding that under the broad definition of “plant” in section 43(3), it includes a ship, and therefore, a ship is equipment of the business of a ship owner.

    The case is: Poompuhar Shipping Corporation Ltd. and West Asia Maritime Ltd. Read a November 2013 report [PDF 467 KB]

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