India: Determining permanent establishment, bandwidth connectivity charges under tax treaties

India: Determining permanent establishment

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

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  • Indian subsidiary of Dutch holding company not “permanent establishment” in India: The Delhi Bench of the Income-tax Appellate Tribunal held that an Indian subsidiary of the taxpayer—a Dutch group holding company, engaged in selling storage system equipment and products (including embedded software) and rendering certain services in India—is not a permanent establishment under provisions of the India-Netherlands income tax treaty. There was no evidence that the taxpayer had personnel in India or that it controlled the Indian subsidiary. The case is: NetApp B. V. Read a February 2017 report [PDF 350 KB]
  • Tax treatment of payments for bandwidth on underwater sea cable: The Delhi Bench of the Income-tax Appellate Tribunal held that payments received by the taxpayer (operating a call center) for bandwidth connectivity charges are not taxable as royalty payments or as “fees for technical services” under provisions of the Income-tax Act, 1961 or the India-United States income tax treaty. The case is: Geo Connect Ltd. Read a February 2017 report [PDF 371 KB]
  • Exemptions expedited under employee deposit-linked insurance plan: The Employees’ Provident Fund Organisation issued guidance concerning applications for expedited employee deposit-linked insurance exemptions. Read a February 2017 report [PDF 328 KB]

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