20 May 2011
Hi All, with reference to above, My query is, a german co is paying royalties for some software products to the indian co. So in this case do the German Co have to deduct the tax on the amount paid to the Indian Co.
If yes, please provide me the section, rules or DTAA arrangement. The fiscal authorities of German Co are asking that the German Co should deduct the tax on the remittance to the Indian Co
Please help me on this at the earliest Thanks in advance Regards Hitesh
21 May 2011
As per Article 12 of India-Germany DTAA the term royalty means"The term royalties as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.
Here as it has been held by OECD that mere supply of software shall not be deemed to royalty.
So kindly check whether the German Co. is paying royalty as per Article 12 or something else.
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