In a setback to Google India, the Income Tax Appellate Tribunal on Friday, May 11, announced the payments made by it to the parent firm Google Ireland constitute a royalty under the Indian law, as well as under the India-Ireland Double Tax Avoidance Treaty (DTAA), and therefore are subject to withholding tax.
Some tax experts estimate that Google may have to pay a tax of around Rs 400 crore following the order.
A Google spokesperson said the company would file an appeal in the high court “as this ruling is an inaccurate representation of our business operations in India.”
The company said it complies with all tax laws in India and pays all applicable taxes. “The order is also a clear departure from previous judgments on the issue and is not in line with India’s double taxation avoidance agreement,” it said.
The latest ruling came on an appeal by Google India against the decision of the Bengaluru bench of the ITAT.
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