Matching Solutions Not Taxable Under India–US DTAA: Delhi High Court Grants NIL TDS Relief To Refinitiv US
The Delhi High Court has recently set aside a 15% tax withholding certificate issued to Refinitiv US LLC, a financial market data company under Section 197 of the Income Tax Act, 1961.
A Division Bench of Justices Dinesh Mehta and Vinod Kumar directed the tax authorities to issue a NIL TDS certificate in respect of income earned from its Matching Solutions services, holding that such income is not taxable in India under the India–US Double Taxation Avoidance Agreement (DTAA).
The development comes in a petition moved by Refinitiv US LLC, a non-resident company incorporated in the United States which provides global electronic platforms for trading in foreign exchange spot and forward contracts (Matching Solutions), along with certain support services.
The company had sought a NIL TDS certificate, contending that the receipts from both Matching Solutions and support services did not constitute “fees for included services” under Article 12(4) of the India–US DTAA and were therefore not taxable in India.
It relied on earlier decisions of the Income Tax Appellate Tribunal and a recent ruling of the Delhi High Court in Financial and Risk Organisation Limited, where similar services were held to be non-taxable and entitled to NIL TDS treatment.
While the Revenue did not dispute the petitioner's entitlement to NIL TDS in respect of Matching Solutions, it defended the levy in relation to Support Services, contending that those services could be taxable in India.
The High Court held that Refinitiv was entitled to a NIL TDS certificate for Matching Solutions, noting that the issue was covered in the assessee's favour by precedent. It thus set aside the impugned order and certificate to that extent and directed the competent authority to issue a NIL rate certificate within 15 days.
“With respect to support services or any other services, the competent authority shall be free to take decision as deemed appropriate in accordance with law,” the Court ordered and partly allowed the plea.
For Petitioner: Senior Advocate Ajay Vohra with Advocates Dr. Shashwat Bajpai and Mayank Chaturvedi
For Respondent: Advocate Sunil Agarwal, SSC, Advocates Monica Benjamin and Gibran Naushad, JSCs and Advocate Rohit Chakraborty