The Indian Supreme Court yesterday ruled that firms based overseas do not have to pay taxes on income generated by their Indian operations, if the income is generated at market prices.
Multinational banks and other corporations have increasingly set up such operations as call centers in India. The Supreme Court agreed with a lower court ruling in a case involving investment bank Morgan Stanley that its outsourced operations in India cannot be defined as permanent establishments, so the income can’t be taxed. The court ruled that the multinationals must pay market rates for deals conducted in India to benefit from the no-tax ruling.
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