Author: Harshit Mehta, Chandandeep Kaur & Vijay Krishna, ASA
In recent years, the Indian tax landscape has witnessed a surge in disputes surrounding the characterization and taxability of cross-border payments, especially in the context of intra-group financial arrangements. One such recurring and contentious issue is the taxability of guarantee commissions paid by Indian subsidiaries to their foreign parent entities on account of guarantees provided towards borrowings by Indian subsidiaries from foreign banks. Historically treated inconsistently by taxpayers, this subject finally reached the Indian Supreme Court (SC) in Johnson Matthey Public Ltd. Co. v. CIT , where pivotal questions on characterization, source, and taxability were examined.
Published on – Taxsutra
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