Author: Ashwath Pai & Sagar Nagaraj ASA
Since the 1991 economic reforms, India has witnessed a rise in multinational groups investing in the country. While these groups allow their subsidiaries to utilize advanced technologies, the Intellectual Property (IP) often remains with the parent companies, with Indian subsidiaries paying royalties for its use. The royalty rate depends on factors like the nature and utility of the IP and the group’s global policies. However, such payments must comply with Indian regulations, including SEBI guidelines for listed entities and Transfer Pricing (TP) norms under income tax laws.
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