Payment for Background screening and Investigation Services is neither Fees for Technical Services (FTS) nor Royalty

Vivek Jalan | Last updated: 09 February 2026

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A recent ruling clarifies that payments for background screening and investigation services do not qualify as Fees for Technical Services (FTS) or royalty. The court determined that these services involve verifying candidate information, such as employment and education, rather than granting rights to use copyrighted material or making technical knowledge available to clients. Therefore, such payments fall outside the definitions of both FTS and royalty.

The definition of "royalty" requires that the consideration received must be for the use of, or right to use, any copyright of a literary, artistic, or scientific work. As envisaged in the decision of the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd. vs. CIT

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About the Author

Vivek Jalan

DESIGNATED PARTNER

Mr. Vivek Jalan is a FCA, Qualified LL.M (Constitutional Law) and LL.B. He is the Chairman of The Fiscal Affairs and Taxation Committee of The Bengal Chamber of Commerce and Industry. He is the Convenor on Indirect Taxes of the CII- Economic Affairs and Taxation Committee (ER); He is also a visiting faculty for Indirec ... Read more

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