Indian firms outsourcing routine toil to their overseas subsidiaries would not maintain to remove custody burden on the payments made to them.
Clothed in a innovatory ruling, the Authority of Advance Ruling (AAR) has held with the aim of firms are exempted from deducting the custody burden on the payments made in place of services like dictation and data handing out.
Allowing the appeal of a Chennai-based RR Donnelley Outsource, AAR held with the aim of until the toil is in the nature of technical, managerial or consultancy, it does fall under with the aim of services mentioned under the Income Tax Act.
RR Donnelley Outsource was outsourcing its routine toil to its UK-based piece RRD UK and paying accordingly. The burden field had asked to wage duty on with the aim of and it was challenged by AAI.
Allowing the appeal, the authority thought, "The services rendered by the RRD UK (data handing out, print management, et cetera.) are not tantamount to some managerial, technical or consultancy services. Hence the consideration traditional in place of such services are not taxable."
AAR spoken its views while examining whether the amount traditional by RRD UK under the data handing out services agreement is taxable as 'fees in place of technical services', under the Income Tax Act and the Double Taxation Avoidance Agreement (DTAA) sandwiched between India and the United Kingdom.
It thought the amount traditional by RRD UK is not taxable as apiece Article 13 of the Indo-UK DTAA.
"In our consider, near is rebuff move of technical skill or know-how while rendering the service by RRD UK to RRD India. While apiece Article 13 of the Indo-UK agreement, RRD UK is not rendering some managerial or technical services to RRD India and therefore the payment traditional is not eligible to burden," AAR thought.
Moreover, since the amount traditional by the RRD UK is not taxable, the question of custody burden by RRD India "does not arise", it added.
RR Donnelley India Outsource (RRD India) is an Indian company which provides solutions in advertisement printing, target mail, economic printing, call centres, logistics and digital photograph.
Clothed in a innovatory ruling, the Authority of Advance Ruling (AAR) has held with the aim of firms are exempted from deducting the custody burden on the payments made in place of services like dictation and data handing out.
Allowing the appeal of a Chennai-based RR Donnelley Outsource, AAR held with the aim of until the toil is in the nature of technical, managerial or consultancy, it does fall under with the aim of services mentioned under the Income Tax Act.
RR Donnelley Outsource was outsourcing its routine toil to its UK-based piece RRD UK and paying accordingly. The burden field had asked to wage duty on with the aim of and it was challenged by AAI.
Allowing the appeal, the authority thought, "The services rendered by the RRD UK (data handing out, print management, et cetera.) are not tantamount to some managerial, technical or consultancy services. Hence the consideration traditional in place of such services are not taxable."
AAR spoken its views while examining whether the amount traditional by RRD UK under the data handing out services agreement is taxable as 'fees in place of technical services', under the Income Tax Act and the Double Taxation Avoidance Agreement (DTAA) sandwiched between India and the United Kingdom.
It thought the amount traditional by RRD UK is not taxable as apiece Article 13 of the Indo-UK DTAA.
"In our consider, near is rebuff move of technical skill or know-how while rendering the service by RRD UK to RRD India. While apiece Article 13 of the Indo-UK agreement, RRD UK is not rendering some managerial or technical services to RRD India and therefore the payment traditional is not eligible to burden," AAR thought.
Moreover, since the amount traditional by the RRD UK is not taxable, the question of custody burden by RRD India "does not arise", it added.
RR Donnelley India Outsource (RRD India) is an Indian company which provides solutions in advertisement printing, target mail, economic printing, call centres, logistics and digital photograph.