Here is a ruling from Indian tax administration which makes foreign portals with a base (permanent establishment) in India liable to pay taxes if they sell goods and services to Indian customers/subscribers. The Authority for Advance Ruling (AAR) – a division of the finance ministry – has “directed that payments made by an Indian subscriber for using a portal of a foreign company will be subject to deduction of tax at source”, reports Business Standard.
AAR’s ruling was in response to an appeal filed by Singapore-based Cargo Community Network Pte Ltd, which runs Ezycargo, an air cargo portal that enables an agent based in India to access the data bank of airlines for flight schedules and cargo space availability.
AAR said that since the company has a base in India (although a help desk office), and so any income that it accrues from the Indian subscribers (such as the one-time receipt of system-connect fees, monthly subscription fees and help-desk charges) fall within the purview of business income and are taxable in India.
The company argued that these charges do not fall under the category of royalty or fees for technical services, and a liaison office could not be treated as a
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