Articles

Implementing the Multilateral Instrument in India-The Notification Conundrum [Oct 2025] New

Abstract: In the Sky High Leasing Co. Ltd. v. ACIT [2025] ITA No. 1198/Mum/2025, the Indian Income-tax Appellate Tribunal examined whether, in the absence of a separate protocol or notification amending the concerned double tax avoidance agreement (DTAA), the principal purpose test provision in the MLI can be read to restrict or alter the benefits otherwise available under the DTAA. The ruling followed the India Supreme Court ruling in Nestlé, SA, [Civil Appeal No. 1420 of 2023], which dealt with the Most Favored Nation (MFN) clause in India’s treaties. 
This article provides a brief description of the constitutional requirements in India for entering into treaties and granting them the force of law. It then examines the notification requirement under Indian domestic law to implement tax treaties and their revisions, particularly in the context of the MLI signed by India. It examines the Vienna Convention on the Law of Treaties. It concludes that the MLI has already been implemented into domestic law by the 2019 notification, and it requires no further notification. 

Treaty Entitlement, Principal Purpose Test, and GAAR-Select Issues [Oct 2025] New

Abstract-The General Anti-Avoidance Rules have been on the statute in India for almost a decade. The court rulings relating to GAAR have started trickling in. The GAAR is no longer just for passive reading; it has entered the boardrooms, where decision-makers in business are actively seeking reassurance that commercial transactions do not fall foul of the general anti-avoidance rules.
It will be some years before the judicial examination of the provisions and their interpretation by the courts becomes available in sufficient quantity and scope as guidance to taxpayers and administrators. In this scenario, a close look at the statutory provisions in Chapter X-A, along with a scan of codified GAAR in other jurisdictions that have rich jurisprudence interpreting these provisions, may provide some insights into how the provisions will eventually be interpreted by the courts in India. This paper deals with some selected issues. It initiates discussion around them with a hope of gauging what the future holds for GAAR.

Economic Substance and the General Anti-Avoidance Rules in India [Oct 2024] 

Abstract-Though the general anti-avoidance rules contained in Chapter X-A of the Income-tax Act, 1961 have been in force since 2017, it has taken more than half a decade for the litigation to reach the courts. In the meanwhile, there have been developments elsewhere in the world on combatting tax avoidance. This piece describes the codification of the economic substance in the US and Canadian tax laws and the recent court rulings and attempts to draw out lessons they may hold in the Indian context. Also discussed is whether an absence of a significant non-tax purpose in an arrangement is enough for it to be declared impermissible under the Indian GAAR.

ATO Draft Ruling 2024-D1 on software payments as royalties - An analysis [May 2024] 

Abstract- The Australian Tax Office has issued a draft Tax Ruling TR 2024/D1 to provide guidance on payments for computer software, especially on modern forms of software distribution, including digital channels and cloud computing. That this advice on characterising software royalties has been under development for so long gives one a hint of the complex nature of the underlying law and its application to the rapid developments in technology and commerce and the taxability of income earned from computer software. Australia is not alone in this endeavour: several countries have grappled with the issue and have attempted to solve it (unsuccessfully, in the author’s view) by issuing guidance on when payments for computer software would be characterised as royalties under their domestic law and tax treaties. The article discusses some technical issues arising out of the Draft Ruling in interpreting copyright law and their impact on taxation. The discussion could be useful in characterising SaaS subscription payments and other variants in other countries, including India.

Tax Treaties and the MLI -Interpretation and Interplay [April 2023] 

Abstract- The Multilateral Instrument which was signed in 2016 to give effect to the BEPS measures in treaties, has begun taking effect. Several of India's treaties in her treaty network are already impacted by the changes brought in by the MLI. The Paper examines the implementation of the MLI in India in the background of the Indian Constitutional provisions that inform the treaty-making rules in the country. Apart from understanding the scope of the MLI, the Paper discusses the impact of the various articles of the Vienna Convention on the Law of Treaties in interpreting the MLI provisions. The Paper describes the compatibility clauses and how they define the modification of CTA provisions. The impact of notifications mismatch on the CTA is explored. The Paper deals with some posers on the subject with an aim to provoke deeper discussion on the MLI and its impact on treaties. Though the Paper describes how and to what extent treaties entered into by India are impacted, the reasoning and conclusion contained in it can surely be of a more general application and to treaties between other countries.

Residence of Individuals under the Income Tax Law in India [December 2023] 

Abstract- The status of residence for the purposes of income tax is a primary factor in determining a taxpayer's scope of taxation. This article discusses the various provisions under Indian income tax law that apply to individuals in determining their residence for taxation. It also examines the impact of residence under a double tax avoidance agreement (DTAA) on the residential status under domestic tax law.

New Zealand Supreme Court ruling in Frucor - Lessons for applying Indian GAAR [March 2023]

Abstract: The Indian General Anti-avoidance Rules (GAAR) is of recent vintage and litigation around the same is yet to reach the courts. Foreign jurisprudence on tax avoidance could provide interesting insights, at least until courts in India deal with the provisions in the Indian law. The New Zealand Supreme Court recently decided on tax avoidance in Frucor Suntory [2022] NZSC 113. The ruling could have some lessons in understanding the Indian GAAR in Chapter X-A of the Income-tax Act, 1961 though the GAARs of the two countries are markedly different in their structure and design. This piece attempts to identify some straws in the wind from this latest ruling from the Apex Court in New Zealand and draw parallels which may be useful in the application of the Indian GAAR.

Tax Treaties - Shields or Swords - A Case Study Analysis [August 2022]

Abstarct: The Australian High Court ruling dismissing Satyam Computers' appeal raises interesting issues that the Article analyses through a Case Study. The impact of Art. 23 of the India-Australia DTAA on the Income-tax Act, 1961 and whether the Treaty can impose a charge even though the Income-tax Act, 1961 does not, and what is the effect of section 90(1) and 90(2), is analysed.

Comments on the ATO Draft Ruling D4-2021 on taxing software payments as royalties [July 2021]

Abstract: Taxation of software payments as royalties has been a vexed issue worldwide. The controversy has been settled to some extent by the Supreme Court in India but that ruling has also thrown up new controversies for future litigation. A fresh attempt by the Australian tax authorities to characterise software payments as royalties is interesting but not without problems. This piece deals with the understanding of the exclusive rights available to a copyright owner under the Australian Copyright Act, 1968 and the impact that should have while ascertaining the characterisation of software payments under the ITAA 1936. The conclusions drawn also should apply to interpret the meaning of the term royalties in double tax avoidance agreements. The write up is based on the submissions made by the author to the ATO in response to the Draft Ruling.

Implementing tax treaties in the Equalisation Levy Law in India [August 2020]

Reconstructing the Treaty Network – India Branch Report for International Fiscal Association Congress 2020 Cancun [July 2020]

Abstract: This report was drafted with a focus on India for IFA's general report on the same subject and was published by IFA in July 2020 as part of the 'Cahiers de Droit Fiscal International' No. 105a in connection with 2020 IFA Congress in Cancun, Mexico. India has actively participated in the Base Erosion and Profit Shifting (‘BEPS’) initiative and its positions have shaped the outcome in some areas of contention. Being largely a source state from where foreigners derive income on which India can collect only limited tax, especially due to the operation of double tax avoidance treaties, India has been sensitive to cases where benefits arising from bilateral treaties are claimed by parties belonging to third countries which leads to the erosion of the Indian tax base. That India embraced the BEPS Project whole-heartedly is evident from its adoption of most of the BEPS countermeasures contained in the Multilateral Instrument (“MLI”). Its reservations and opt-outs are consistent with its policies and practices. The effect of these positions (by India and its treaty partners) is discussed in this Branch Report.

Comments on UN Discussion Draft on Proposed changes to Article 12 on Royalties [January 2020]

Foreign Jurisprudence on GAAR and their relevance to India [November 2018]

Abstract: The general anti-avoidance rules have been introduced in the Indian direct tax landscape recently. It will be some years before the judicial examination of the provisions and their interpretation by the courts are available as guidance to the taxpayers and the administrators. In this scenario, a scan of the legal provisions with countries with codified GAAR may provide some insights into how the provisions will eventually be interpreted by the courts. Though this is not an attempt to do a comprehensive comparison of the GAAR of various countries, this discussion aims to touch upon the significant areas and hopefully provide to the reader some straws in the wind about how the Indian GAAR provisions will be understood in the future.

GAAR of Australia, South Africa and the United Kingdom – A comparison with Indian GAAR [October 2017]

Abstract: A comparison of the Indian General Anti Avoidance Rules with that of Australian, South African and United Kingdom GAAR.

Copyright Law and Taxation of Software in India –[(Article can be accessed from Asia Pacific Tax Bulletin, IBFD) August 2016]

Abstract: This article comprehensively examines the taxation of payments for software in the light of recent developments in legislation and judicial rulings in India. The author considers specific aspects of copyright law in India, the United Kingdom and the United States, and India’s international copyright treaty obligations, and how they impact upon the characterization of payments for software as royalties under India’s domestic law and tax treaties.

Equalisation Levy 1.0 -Applicability of Non-discrimination Rules in International Agreements [June 2016]

Abstract: The Indian Finance Act, 2016 has introduced an equalisation levy on online advertising services with effect from June, 2016. The Report on Digital Economy as part of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project has articulated the concerns of various countries across the world about the ease with which businesses that make the digital economy escape a taxing presence in the countries from where they earn their revenues as well as their 'home " countries. This article examines whether or not this equalisation levy is in accordance with the non-discrimination provisions in the double tax conventions as well as the WTO Agreements, more particularly, the General Agreement on Trade in services (GATS).

Software Distribution – Copyright and Income-tax Issues in India [March 2012]

Abstract: Taxation of cross-border payments in respect of software has been a controversial subject with the law yet to be settled in India. This can be seen from the number of contradictory and contrasting decisions on software in the last couple of years. Though largely the debate has been on the End User Licence Agreements (EULA), copyrighted article and copyright, there are a few judgments which have dealt with the distributor model. This article attempts to examine the Doctrine of First Sale and Principle of Exhaustion under the Copyright Law and its effect on the definition of royalty under the Indian income-tax law and its double tax treaties. © 2012 IBFD. Originally published in 66 Bull. Intl. Taxn. 7, Online Journals IBFD. Bulletin for International Taxation is available online, please visit http://www.ibfd.org. Reproduced with permission. Persons who receive or access the reproduced work are notified that the material may not be further made available or distributed.