Verizon Data Services India Private Limited (A.A.R. Nos. 865 of 2010) - The AAR held that the seconded personnel are employees of a foreign company and render managerial services to the Applicant. Hence, the payments made would be in the nature of income and would be regarded as fees for included services under the provisions of the India – US Double Taxation Avoidance Agreement (US DTAA) as well as fees for technical services under the provisions of the Indian Tax laws. Furthermore, the ‘make available’ criteria, as stipulated in the US DTAA, are not required to be satisfied in the case of managerial services. Hence, taxes were required to be withheld on the Applicant’s payments to its US affiliate. Payment made by resident company on account of reimbursement of salary cost and other benefits of the expatriate employees to non-resident for rendering managerial and other related services is taxable as “Fees for Included Services (FIS)” at the rate of 20%.
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