Presentation onTax Deduction at Source.pptVIP

footer Presentation on Tax Deduction at Source TDS on payments to non residents for (a) Software (b) Satellite Connectivity Other TDS issues Implications of non-compliance of TDS provisions  ISP contracts with SAT for availing connectivity/ access to the Internet cloud ISP has its own gateway in India for availing connectivity/access Satellite/ other network facilities of SAT operated by SAT ISP has no possession/ control over the satellite/ other SAT facilities Transaction merely affords connectivity Employees visiting India frequently for marketing Definition of Royalty Payments for ‘Right to use’ equipment secret formula or process What is ‘Right to use’ Royalty in respect of license ‘to use’ ….is income to the recipient from letting [OECD Commentary] Phrase interpreted to mean a “leasing transaction” [Memorandum explaining Finance Act 2001] Letting/leasing would envisage separation of ownership of an asset and its possession [Madras H.C.] …..what is ‘Right to use’ Klaus Vogel: Clean distinction between letting the asset to the payer and the use of it by the payee himself Payee using the asset himself to provide services to payer while not letting the same to him does not qualify as ‘right to use’ Right to use Equipment - Criteria for determination Customer has physical possession/ control over the equipment Has significant economic or possessory interest in the equipment Provider does not bear any risk of substantially diminished receipts or substantially increased expenditures Provider does not use the property concurrently to provide services to others [OECD TAG Report] None of the conditions fulfilled in present case Whether Right to use secret formula/process - Criteria Imparting information about ideas and principles underlying the program viz. logic, algorithms or programming lan