Withholding Tax Implications On Payment Of Technical Services Fee

One of the most common questions in an international transaction is the tax liability of the non-resident on the income proposed to be generated in India on provision of managerial, technical or consultancy services in India. In this article, we will be addressing the issue faced vis-à-vis a withholding tax implication on payments made to foreign collaborators for provision of technical services.

As per Section 9(1)(vii), income by way of 'fees for technical services' payable by a person who is a resident of India is deemed to accrue or arise in India (except where the fees are payable in respect of services utilized in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India).