Price paid for purchase of software from a non-resident entity is not “royalty” under Income Tax Act, 1961

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DID YOU KNOW that the purchase price paid to any non-resident manufacturer or distributor (such as IBM, Microsoft etc.) by an Indian distributor or end-user does not constitute royalty, so as to give rise to any income taxable in India?

DID YOU ALSO KNOW that our office represented a client before the Supreme Court in a batch of appeals concerning the categorisation and taxation of payments made to non-resident manufacturers or distributors for the purchase of end-user computer software (such as MS Windows), under the Income Tax Act, 1961 & the Double Taxation Avoidance Agreements (DTAA) entered into between India and other countries.

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