This Tax Alert summarizes a recent decision of Supreme Court (SC) in a batch of appeals with the lead case being that of Kotak Securities Ltd. (Taxpayer) , wherein the issue was whether transaction charges paid to Bombay Stock Exchange (BSE) by its members constitutes Fees for Technical Services (FTS) subject to withholding under the Indian Tax Laws (ITL).
SC held that services rendered by BSE were not “technical services”; as it did not satisfy the test of specialized, exclusive or individual requirement of the members. SC held that services rendered by BSE were akin to a “facility” provided for transacting a business rather than a technical service. Hence, the transaction charges paid to BSE do not constitute FTS under the ITL
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