ICAI has published the revised “Technical Guide on Royalty and Fees for Technical Services” (December 2022 Edition), which incorporates all the amendments made by the Finance Act, 2022, for guidance of the members/ stakeholders.
The importance of being aware of the tax implications that may be associated with royalty income that is generated from the utilisation of intangible property has significantly increased over the course of time. Because of advances in technology and the rapidly increasing volume of commercial transactions between multinational corporations, the tax authorities have become more wary of transactions relating to intangible assets, which may or may not be subject to income tax. This is because there is a possibility that such transactions will be subject to income tax.
Over the course of time, the importance of intangible assets, in particular royalties and fees for foreign technical services (FTS), has skyrocketed. Because of the interplay between the Income Tax Act and the DTAAs, there are frequent disagreements between taxpayers and the tax authorities regarding the nature, form, and multiple dimensions of intellectual property rights or technical services. These disagreements lead to frequent tax disputes.
This ICAI Technical Guide offers up-to-date information on the subject of international transactions involving royalties and foreign technical services (FTS).
ICAI “Technical Guide on Royalty and Fees for Technical Services” (December 2022)