India: Call centers, consultancy services | KPMG | GLOBAL

India: Payments relating to call centers, consultancy services

India: Call centers, consultancy services

The KPMG member firm in India has prepared reports describing the following developments (read more at the hyperlinks provided below).


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  • Amount for providing “gateway” for call centers is taxable as royalty: The Delhi Bench of the Income-tax Appellate Tribunal held that consideration received by a foreign company for providing access to its internet, email, and networking facilities by which it provides a gateway that will facilitate call centers for incoming and outgoing calls to and from India to the United States is taxable as “royalty" under the Income-tax Act, 1961 and under the India-United States income tax treaty. The case is: Cincom System Inc.
  • Services in connection with procurement of goods, “fees for technical services”: The Authority for Advance Rulings (AAR) issued a ruling concluding that service fees received from the Indian company for providing consultancy services in connection with the procurement of goods are taxable as “fees for technical services” (FTS) under the India-China income tax treaty. The case is: Guangzhou Usha International Ltd.
  • Undisclosed foreign assets: The Central Board of Direct Taxes (CBDT) provided a one-time compliance opportunity for persons who have undisclosed foreign assets (for income tax purposes).
  • CBDT cannot impose additional conditions on industrial park: The Hyderabad Bench of the Income-tax Appellate Tribunal held that the Ministry of Commerce and Industry is the government authority that alone can approve an industrial park under the Income Tax Rules, 1962, or withdraw tax benefit for the industrial park. The case is: VITP Private Limited.
  • Defining the term “month” in tax law: The Ahmedabad Bench of the Income-tax Appellate Tribunal held that the term “month” in a provision of the Income-tax Act, 1961, refers to a month as determined by the British calendar. At issue was interest payable for 24 months and 28 days, which the tribunal concluded was not 25 months. The case is: Oil & Natural Gas Commission.
  • Corporate social responsibility: There is a legal requirement for companies to comply with “corporate social responsibility" rules in India. Companies that satisfy a net worth threshold or a net profit threshold must spend 2% of the average net profit of the immediately preceding three years on corporate social responsibility activities. The Financial Year 2014-15 was the first year for the companies to comply with these rules.

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