FOREIGN DATA PROVIDERS' INCOME NOT TAXABLE

Foreign data service providers' earnings through subscription fees from an Indian company will not be taxable in India. However, the AAR has held that providing access to compact information through data retrieval software could be treated as service of a ‘technical nature’ and such payments shall be taxable. Data service providers, which have databases outside India but subscribers in India, are likely to gain from this ruling. The AAR has given the ruling in the case of US-based financial data analysis firm Fact Set Research Systems, which provides financial and economic information to Indian customers by entering into licence agreements with them, granting them the right to use its database and software tools.