Withholding tax need not to be deducted on payments made for services like transcription and data processing –AAR

Indian firms outsourcing routine work to their overseas subsidiaries would not have to deduct withholding tax on the payments made to them. In a landmark ruling, the Authority of Advance Ruling (AAR) ( A.A.R. No.883 of 2010 dated 16.05.2010 – Applicant R.R. Donnelley India Outsource Private Limited)  held that firms are exempted from deducting the withholding tax on the payments made for services like transcription and data processing. Allowing the appeal of a Chennai-based R R Donnelley Outsource, AAR held that until the work is in the nature of technical, managerial or consultancy, it...