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Hike in tax rate on royalties & fees to impact NRIs

The rate increased from 10% to 25%. This would affect NRIs receiving royalties

March 07, 2013 11:16 IST | India Infoline News Service
The Budget 2013 indicated a huge hike in the tax rate on royalties and fees for technical services that an Indian company pays to a non resident Indian or a foreign company.

The rate increased from 10% to 25%. This would affect NRIs receiving royalties.
The increase in rate was done to correct an irregularity. The rate of tax on royalty in the Income-tax Act was lower than the rates provided in a number of Double Tax Avoidance Agreements.

Royalty means any payment made where the original property is retained by the owner and only the right to use is licensed out to the user.

Fees for technical services means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include something that may come under the head "salaries."

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