How does the India-Australia trade pact benefit the Information technology firms in India? Explain (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· The Economic Cooperation and Trade Agreement (ECTA) recently signed between India and Australia includes a commitment from Australia to amend its domestic tax law to “…stop the taxation of offshore income of Indian firms providing technical services to Australia”.
· Accordingly, the India-Australia Tax Treaty ( For the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income [1991]) is included in Schedule 35 to the Australian International Tax Agreements Act.
· In the case of Tech Mahindra, the taxpayer had a permanent establishment (PE) in Australia as well as offshore staff located in India. For completing contracts with Australian clients, the company used services of its staff located in Australia as well as those located in India.
· The source of income emanating from offshore services rendered from India would not be regarded as taxable in Australia, under its domestic tax law since the services are performed outside Australia.
· Representations were made to the Indian government to resolve this issue. Consequently, Australia’s commitment under the ECTA to resolve this issue through changes to its domestic laws is a welcome development for India-based IT service providers who power the bulk of India’s global service exports.
ANIL KUMAR RAM 3 years
Please review
IAS Parliament 3 years
Good attempt. Keep Writing.
