DTAA – FEES FOR TECHNICAL SERVICES
The Double Tax Avoidance Agreement (DTAA) is a tax treaty signed between two or more countries to help taxpayers avoid paying double taxes on the same income. A DTAA becomes applicable in cases where an individual is a resident of one nation but earns income in another. India presently has DTAA with 80+ countries, with plans to sign such treaties with more countries in the years to come.
DEFINITION OF FTS (FEES FOR TECHNICAL SERVICES)
FTS CLAUSE AS PER DIFFERENT DTAA’s
FTS DEFINITION UNDER THE TREATIES
FTS AS PER INDIA-US TAX TREATY
- Ancillary and subsidiary to the application enjoyment of the right, property or information,
- Make available technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of technical plan or technical design.
Consideration for rendering of any technical or consultancy services, if such services:
ABSENCE OF ARTICLE ON FTS IN DTAA
- • Whether income would be taxed as business income under Article 7?
- • Whether income would be taxed under the residuary Article ‘Other Income’? Or
- • Whether income would be taxed as per provisions of the Act?
In DTAA’s which do not contain FTS Clause:
ILLUSTRATIVE EXAMPLES OF INCOME
TAX TREATEMENT FOR FTS AS PER THE PROVISIONS OF DTAA
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