Why is income accruing to consultants working for MNCs always under some sort of doubt?
Indian economy witnessed substantial growth in last few years and it also provided business opportunities to foreign companies in the fields of infrastructure and real estate. Given the complex regulatory framework in India, consultants who provide advisory services in these fields, refer their clients (who are interested in such business opportunities in India) to their Indian subsidiary / group company, which would provide services to such clients in India. The process results in transactions between the consultants and their Indian counterparts in the form of sharing of revenue earned by subsidiary/ group company out of services rendered to such referrals in India. Walk us through the case where authorities have decided referral fees received by a non-resident company are not liable to tax in India. The Authority for Advance Ruling, in a recent case, has examined the taxability of referral fees paid by an Indian subsidiary to its foreign parent based in Singapore. In the facts of th
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