E-invoicing software solutions to Indian Company is taxable as “Fee for Technical Services” (FTS) taxable under Indian law.
The question often arises as to what are the first principles of tech taxation – FTS or Other Income?
In a pivotal decision, the tribunal in Delhi has deemed UK-based Tungsten Network Ltd.’s income from e-invoicing software solutions to Genpact India as “fee for technical services” (FTS), taxable under Indian law. A missed tax return filing escalated to a 10% levy on Tungsten’s Rs 2.93 Crore (~ USD 344,861) income.
Here’s the twist: the services were for Genpact’s client GSK, operating outside India, but since the payment came from Genpact India, the ITAT ruled the income source as Indian. The verdict leans on the Supreme Court’s broad interpretation of “technical services,” including any service involving technology.
The decision covers a crucial point that the location of the client’s client doesn’t shield income from Indian tax if the payment is made from India.
The copy of the order is as under:
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