• Service: Tax, Global Indirect Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 4/25/2014

India - Services establish fixed-place PE; treatment of bulk SMS 

April 25: The KPMG member firm in India has prepared reports on the following developments (read the April 2014 reports by clicking on the hyperlinks provided below):
  • Stamp tax assessment value also used to establish value in transfer of 99-year leasehold rights - Under a provision of India’s tax law, when real estate (land and/or building) is transferred for consideration that is less than the assessed value for stamp tax purposes, then the stamp tax assessment value is to be used to establish the value of the transferred real estate. The Lucknow Bench of the Income-tax Appellate Tribunal held that a 99-year leasehold right for land is a capital asset to which these stamp tax assessment value rules also apply.

    The case is: Shri Hari Om Gupta. Read an April 2014 report [PDF 378 KB]

  • Services rendered by a Mauritian company constitutes fixed-place PE in India - The Mumbai Bench of the Income-tax Appellate Tribunal held services rendered by a Mauritian company, to an Indian company for improving its management performance constituted a permanent establishment (PE) in India under the India-Mauritius income tax treaty because a place (a facility) in India was at the disposal of the Mauritian company or its employees during the entire period of contract. Accordingly, there was a fixed-place PE in India, under the tax treaty.

    The case is: Renoir Consulting Ltd. Read an April 2014 report [PDF 435 KB]

  • Payments to non-resident company for transmission of bulk SMS not “fees for technical service” - The Chennai Bench of the Income-tax Appellate Tribunal held that payments for bulk SMS (message services) to a non-resident carrier (a mobile communications company) are not fees for technical services because these services do not require any technical knowledge/skill. Because the services were rendered outside India and no part of the payment was chargeable to tax in India, the taxpayer is not required to withhold tax.

    The case is: Velti India Pvt. Ltd. Read an April 2014 report [PDF 322 KB]

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