India: Interest paid by permanent establishment to overseas head office not taxable under India-France treaty (tribunal decision)
Not taxable in India under the interest article of the India-France tax treaty
Not taxable in India under the interest article of the India-France tax treaty
The Mumbai bench of the Tribunal held that interest paid by a permanent establishment (PE) of a foreign bank in India to its overseas head office (HO) was not taxable in India under the interest article of the India-France income tax treaty in the absence of a specific provision in the treaty.
The case related to a period prior to the introduction of a specific provision in the Income-tax Act, 1961 by the Finance Act, 2015, stipulating that any interest payable by a PE of a foreign bank in India to its HO is taxable in India, in addition to any income attributable to the PE. For this purpose, the PE is treated as a separate and independent entity from the HO. However, most Indian tax treaties do not have a similar provision.
Read a May 2024 report prepared by the KPMG member firm in India
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