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Subject Taxability of Royalty income derived in India by a German company, DTAA applicability on the same and credit of taxes paid in India. Facts A Germany-based company charges basic rent and flight hours' basis rent with respect to the helicopter used by The Indian Company, in India. The Ind
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Yes, lease payments for the use of industrial, commercial, or scientific equipment like a helicopter in India are considered 'royalty' under Section 9(1)(vi) of the Income Tax Act, 1961, and are therefore taxable in India.
Under Section 115A of the Income Tax Act, 1961, the tax rate on royalty income for a foreign company is 20% of the gross amount. However, the India-Germany DTAA limits this to 10% of the gross amount if the German company is the beneficial owner.
Yes, under Article 23 of the India-Germany DTAA, a German resident can claim a credit against German tax for the Indian tax paid on income arising in India, subject to the provisions of German tax law.
The article indicates that the German company can claim a credit against its German tax liability for the taxes paid in India. The specific procedure would involve adhering to German tax law regarding foreign tax credits.
Yes, the DTAA affects the taxability. While India can tax the royalty income, the DTAA limits the tax rate to 10% of the gross amount if the German company is the beneficial owner, and it provides for relief from double taxation.
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