FOREIGN UNIVERSITY NOT LIABLE TO TAX

The Authority for Advance Rulings (AAR) held that Foreign Universities providing consultancy services to business chambers or other non profit organizations are not liable to pay tax in India. The Authority pointed out that the payment made in this respect by FICCI to the University of Texas cannot be treated as fee for technical services, which are taxable under the Income Tax Act, 1961.They cannot be subjected to tax as business profits in view of the undisputed and undeniable fact that Texas University has no permanent establishment (PE) in India and the services were not carried out through a PE in India.