Taxing consultancy services in India

By Sumes Dewan,KR Chawla & Co
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Consultancy Services being provided to an Indian entity by an offshore entity are taxable as per Indian laws. However exemption from withholding tax is made available in certain cases, in terms of the Double Taxation Avoidance Agreement executed between India and the country of residence of the service provider.

Sumes Dewan, Partner, KR Chawla & Co
Sumes Dewan
Partner
KR Chawla & Co

Section 9 of the Income Tax Act, 1961, deals with Income that is deemed to accrue and arise in India, while Section 9 (1) (vii) specifically deals with income by way of fees for technical services, payable by a person who is a resident.

Retrospective amendments

In terms of the Finance Act, 2008, the scope of Section 9 (1) (vii) has been further expanded retrospectively with effect from 1 June 1976 wherein income is deemed to accrue or arise in India under relevant sub-clauses shall be included in the total income of the non-resident, whether or not the non-resident has a residence or place of business or business connection in India.

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Sumes Dewan is a partner at KR Chawla & Co Advocates & Legal Consultants. The firm is headquartered in New Delhi and has offices in Chennai, Bangalore and San Francisco, as well as a representative office in Singapore.

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