Finance Bill 2023: Tax on royalty, technical fees to non-resident firms hiked – The New Indian Express

The government has hiked the tax on royalty and fees from technical services earned by non-resident companies from 10% to 20%. 
Published: 25th March 2023 07:51 AM  |   Last Updated: 25th March 2023 07:51 AM   |  A+A-
Image used for representational purpose only. (File Photo)
MUMBAI:  The government has hiked the tax on royalty and fees from technical services earned by non-resident companies from 10% to 20%. The hike in tax on royalty was one of the amendments proposed in ‘The Finance Bill, 2023’ which was tabled in the lower house by the Union Finance Minister Nirmala Sitharaman on Friday. The Finance Bill, 2023, which contains various proposals related to taxation and government spending, was passed with several amendments and 20 more Sections have been added to the Bill.

“In a surprise move the Government has increased the withholding tax rate on royalties and fees for technical services paid to non-residents from 10% to 20% under India’s domestic tax law. Tax treaty benefits will become more critical now to avail a reduced withholding tax rate,” said Gouri Puri, Partner, Shardul Amarchand Mangaldas & Co.
“Foreign entities will need to evaluate their commercial substance to be able to claim such treaty benefits. This may also increase the cost of import of technology in cases where Indian companies are grossing up withholding taxes and treaty benefits are not available,” Puri added. Royalty is any payment made where the original property’s rights are retained by the owner and the right to use is licensed out to the user.

“This increase in rate will lead to a higher rate of tax of withholding tax obligations on payments to be made to non-residents unless there is a tax treat benefit which reduces such rate,” said Saurrav Sood- Practice Leader International Taxation at SW India.   
In a typical example of payments made to US companies, the rate of withholding tax on royalty and fees for technical services under the tax treaty was 15%, however, Indian companies while making such payments used to take benefit of a lower rate as per the domestic tax act, said Sood.

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.
The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.
Kanjhawala hit-and-drag case: Cops file 800-page chargesheet, four charged with murder
Remarriage no ground to deny compensation to accident victim’s widow, rules Bombay HC
45 held in connection with Bihar riots, normalcy restored: Police
India, Malaysia can now trade in Indian rupee
Indictment of former US President Trump ends decades of perceived invincibility
Indians among eight migrants found dead near US-Canada border
The Morning Standard | Dinamani | Kannada Prabha | Samakalika Malayalam | Cinema Express | Indulgexpress | Edex Live | Events Xpress
Contact Us | About Us | Privacy Policy | Terms of Use | Advertise With Us | Careers
Home | Nation | World | Cities | Business | Columns | Entertainment | Sport | Magazine | The Sunday Standard
Copyright – 2023. All rights reserved. Website Designed, Developed & Maintained by Express Network Private Ltd.


Leave a Comment

Your email address will not be published. Required fields are marked *