Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: form 3cd :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: due date for vat payment :: empanelment :: TDS :: ACCOUNTING STANDARDS :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT
General »
 Number of companies paying tax over Rs 100 crore declines in 2013-14
 Tax and the dilemma of the self-employed
 Banks warn share tax hike threatens Paris' post-Brexit appeal
 PMC may decide on property tax rebate for IT firms this week
 I-T Dept is giving out certificates of appreciation. Have you received yours?
 Government works on ironing out benefits refund mechanism for exportersa
  Tax officials are using an IDS provision to question transactions beyond six-year-limit
 Tax-free bonds rally like midcap funds
 Senior citizens do not have to pay advance tax on salary and interest income
 GST: Audit commissioners to get adjudication powers
 Interest on NRE rupee account can be exempt from tax under FEMA

Payments to foreign cos by BPOs taxable: ITAT
September, 08th 2008

Foreign companies providing connectivity and other technical services to domestic call centres through their overseas offices are liable to pay tax on their income in India, the sectoral tribunal has said.

As per the decision by Income Tax Appellate Tribunal (ITAT) in two cases filed by the Hyderabad-based Frontline Software and Call World Technologies, the domestic call centres have to deduct tax at source on payments made to foreign companies on support services from abroad.

Referring to the payments made to overseas companies for providing call connectivity and maintenance services, the tribunal said, "The transaction clearly falls under the definition of 'royalty'...and royalty payment to NRI is deemed to accrue and arises in India and therefore payment is subject to tax deducted at source".

Besides, the tribunal also clarified that a company availing the connectivity service has the responsibility to deduct TDS despite the location of the foreign firm's equipments.

In the case concerned, Hyderabad-based Frontline Software and Call World Technologies had not deducted TDS while making payments to the US-based IGTL Solutions and True Dial Technologies Inc.

The tribunal also rejected the argument of the companies that the entire activity for availing the connectivity facilities from IGTL and True Dial took place in US and therefore the income of foreign firms has no link to India and thus not taxable here.

Dismissing the appeal of the companies, the tribunal confirmed the decision of Commissioner of Income Tax  (appeals) who had held that the payments made by the two companies to the US firms 'is nothing but royalty'.

The services were taken by the two Hyderabad companies to generate and also cater to the outbound PSTN calls within the US through the equipments of the foreign companies.

PSTN is Public switched telephone network or the normal phone network or land line. It is a phone connection which is 'hard wired' used by industrial premises routed through the switchboard. BPO's use this technology for inbound calls and local calls.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Achievements

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions