India: Stock exchange services, foreign direct investment, telecom services

India: Stock exchange services, telecom services

The KPMG member firm in India prepared reports about the following developments (read more at the hyperlinks provided below):

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  • Stock exchange services, provided with respect to share transactions, are not “fees for technical services”: India’s Supreme Court held that services provided by the Bombay Stock Exchange to transact the sale and purchase of shares do not amount to “fees for technical services” and withholding is not required under section 194J of the Income-tax Act, 1961. The case is: Kotak Securities Ltd. Read a March 2016 report [PDF 336 KB]
  • Guidelines for foreign direct investment in e-commerce: India’s government issued guidelines on foreign investment in e-commerce. Read a March 2016 report [PDF 298 KB]
  • Payment of inter-connection usage charges by an Indian telecom service provider to a foreign telecom operator is not “fees for technical services” or a royalty: The Delhi Bench of the Income-tax Appellate Tribunal held that an inter-connection facility and the service of the foreign telecom operator in picking-up, carrying and successful terminating a call over the network is a standard facility, and does not provide any technical services to the taxpayer under the interconnect agreement. Therefore, the payment in the form of inter-connection usage charges is not in the nature of fee for technical services under section 9(1)(vii) of the Income-tax Act, 1961. The process of running the network by telecom operators is essentially the same, so that there is not such an exclusive right over such process to characterise payments for such as a royalty. When a process is widely available in the public domain, it cannot constitute a part of the intellectual property for the purpose a “royalty.” The case is: Bharti Airtel Ltd. Read a March 2016 report [PDF 363 KB]

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