Subscription fee collected for accessing database located outside India – Not Royalty – computer database falls within the scope of ‘literary work - Business Income taxable in India only if there is a PE; No withholding Tax; no returns – AAR
The subscription fee is not taxable in India as royalty. It is liable to be taxed only as business income if at all it is found by the Department that an agency PE exists. At present, on the facts stated by the applicant, it is held that PE is not in existence and therefore the income is not liable to be taxed in India. The customers are not required to withhold the tax, until and unless the Department finds the existence of PE after due enquiry. At present, there is no obligation to file the return in view of the finding that there is no royalty income and on the facts stated by the applicant, there is no PE.
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