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TDS on Subscription Charges

Posted @ September 14, 2017, 8:48 pm under (TDS on Certain Payments)

According to the ARTICLE 7 BUSINESS PROFITS of the Agreement for avoidance of double taxation of income with USA The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to (a) that permanent establishment ; (b) sales in the other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment ; or (c) other business activities carried on in the other State of the same or similar kind as those effected through that permanent establishment.

The payment of Subscription Charges for business information, is in the nature of “Business Profits” under Article 7 of the DTAA between India - USA. If the beneficiary do not have a Permanent Establishment in India as defined in Article 5 of India-USA DTAA, and therefore said remittance is not taxable in India and accordingly, no tax is deductible from the remittance. 

Judicial decisions :
ABC Ltd in. re.:(2006) 284 ITR 1 (AAR)
Dun & Bradstreet Espara S.A. (2005) 272 ITR 99 (AAR)
Wipro Ltd vs ITO (2005) 278 ITR (AT) 57 (Bang) / 1 SOT 663 (Bang)/92 TTJ 796 (Bang)
CIT vs HEG Ltd. (2003) ITR 230 (MP)

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