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India: Royalties paid to nonresident not taxable in India if related to income earned outside India (tribunal decision)

However, royalties could be taxable in India if income-generating activities conducted in India.

May 19, 2026

The Income-tax Appellate Tribunal (Delhi Bench) held that royalties paid by an Indian resident entity to a nonresident taxpayer were not taxable in India to the extent the royalties were used in connection with generating income outside of India.

However, the royalties could be taxable India if related export sales contracts were signed in India or if manufacturing activity using the licensed intellectual property (IP) rights for which the royalties were paid was carried out in India.

The tribunal remanded the issue to the tax officer for fresh examination and determination of the relevant facts.

The case is: Amphenol FCI Asia Pte Ltd. v. ACIT (ITA No. 1851/Del/2022)

Read a May 2026 report prepared by the KPMG member firm in India

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