Withholding Tax

Recently, the Supreme Court (SC) held that without an express notification, the companies cannot, automatically, claim lower withholding tax of 5%, even if provided for in the Direct Tax Avoidance Agreement (DTAA).

  • The SC was hearing a case concerning the withholding tax rate on payments of companies whose parent companies were located in the Netherlands, Switzerland, or France.
  • The companies argued that the double taxation avoidance agreements (DTAAs) between India and these countries had a Most Favoured Nation (MFN) clause.
  • The SC ruled that a 10% withholding tax rate and the benefits under the MFN clause would only be available if the government ....

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