India: Tax treaty treatment of fees for technical services, of minimum alternative tax
14 February 2020
The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below).
Treatment of “fees for technical services” under Protocol with Switzerland: The Mumbai Bench of the Income-tax Appellate Tribunal held that fees for technical services are to be taxed on the gross basis under provisions of the Protocol to the income tax treaty between India and Switzerland. The tribunal agreed with the taxpayer that given the term “at the request of the enterprise” as contained in the Protocol, the taxpayer was able to decide the tax treatment on the gross basis or net basis. The case is: AGT International GmbH. Read a February 2020 report [PDF 310 KB]
No reduction of book profits for computation of minimum alternate tax allowed using tax treaty provisions: The Delhi bench of Income-tax Appellate Tribunal held that the minimum alternative tax provisions do not allow an exclusion of income using an income tax treaty. Therefore, the tribunal concluded that the taxpayer was not able to reduce book profit using the tax treaty measures. In this case, the taxpayer had excluded from its minimum alternative tax calculations, an amount of income earned from projects in Bangladesh, Malaysia, and the UK by asserting that this income earned in foreign countries was not taxable in India under the applicable income tax treaty provisions. The tribunal disagreed, noting that nowhere is the exclusion of income pursuant to an income tax treaty permitted under the minimum alternate tax provisions. The case is: IRCON International Limited. Read a February 2020 report [PDF 321 KB]
The information contained in TaxNewsFlash is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230, as the content of this document is issued for general informational purposes only, is intended to enhance the reader’s knowledge on the matters addressed therein, and is not intended to be applied to any specific reader’s particular set of facts. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Applicability of the information to specific situations should be determined through consultation with your tax adviser.
KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.
Direct comments, including requests for subscriptions, to Washington National Tax. For more information, contact KPMG’s Federal Tax Legislative and Regulatory Services Group at + 1 202.533.4366, 1801 K Street NW, Washington, DC 20006-1301.