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An analysis by Economic Laws Practice (ELP), Taxand India
India’s Finance Ministry has recently identified several overseas digital firms avoiding tax in India by bypassing the permanent establishment (PE) rule. Many of these companies have created marketing-support-services (MSS) arms in India, claiming that these do not qualify as a PE since the services are rendered from abroad.
The ministry has invoked the principle of source-based taxation under the Income Tax Act, to question the “organisational structures” built to avoid paying taxes on income earned from Indian operations.
Dipesh Jain from Economic Laws Practice (ELP), Taxand India, has been quoted in an article published in the Financial Express which analyses this move in more detail. Find out more here.
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