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Subscription fees separate from royalty for tax purposes: Tax ruling

Subscription fees separate from royalty for tax purposes: Tax ruling

Subscription fees cannot be treated as royalty and access to copyright content is separate from access to copyright itself a tax tribunal ruled recently that will give clarity to several multinationals.

A US based research company was charging subscriptions for accessing its database and online journals to customers in India. The company was charging subscriptions from its India customers for accessing data, copyrighted material and research that sat on servers outside India.

Taxman had claimed that the subscription fee charged is essentially royalty. The Mumbai tax tribunal said that there is a fundamental difference between the two under India’s tax treaty agreements.

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