Delhi High Court Cuts TDS To 0.5% for UK Company Travelport, Sets Aside 1.6% Certificate

The Delhi High Court has granted partial relief to UK-based travel technology company Travelport International Operations Limited by setting aside a tax withholding certificate that required deduction of tax at 1.6%.

A division bench of Justices Dinesh Mehta and Vinod Kumar directed the tax authorities to issue a fresh certificate providing deduction of tax at a reduced rate of 0.5%.

Travelport, a United Kingdom tax resident, provides electronic global distribution services to the travel industry through its computer reservation system. The company earns booking fees from airlines and receives certain commission-based income linked to transactions involving India.

For the assessment year 2025–26, Travelport sought a lower tax withholding certificate under Section 197 of the Income Tax Act. However, the competent authority issued a certificate requiring tax deduction at the rate of 1.6%.

Before the High Court, Travelport contended that as per earlier decisions of the Income Tax Appellate Tribunal, upheld by the Supreme Court in its own case, only 15% of its receipts could be attributed to its Permanent Establishment (PE) in India.It further argued that the entire commission of 68% paid to Indian distribution agents had to be deducted from the revenue attributed to the Indian PE, which could result in no taxable income in India

The Revenue, on the other hand, argued that income relating to bookings made outside India but resulting in travel to India are taxable. It also pointed out that tax demands on such transactions had been raised in previous assessment years and were pending adjudication before appellate authorities.

The High Court held that the legal position regarding attribution of revenue to Travelport's Indian PE was settled by the Supreme Court, which had clarified that only 15% of its total revenue could be attributed to its Permanent Establishment (PE) in India.

It further ruled that the entire commission paid to distribution agents had to be deducted from the attributed revenue and could not be restricted proportionately. It observed that once such expenditure was deducted, the income attributable to the Indian PE could become negative.

The Court, however, declined to conclusively rule on the taxability of revenue arising from transactions involving non-India points of sale. It noted that this issue was pending consideration before appellate authorities.

Accordingly, the Court set aside the impugned withholding certificate and directed the authorities to issue a fresh certificate prescribing a TDS rate of 0.5%, after proportionately accounting for revenue from non-India points of sale.

For Petitioner: Senior Advocate Ajay Vohra with Advocates Manuj Sabharwal, Drona Negi and Devvrat Tiwari

For Respondents: Senior Standing Counsel Siddhartha Sinha and Junior Standing Counsel Easha Gurung