E-commerce giant Amazon’s arm Amazon Web Services (AWS) has been served a Rs 549 crore tax demand notice by the income tax department. AWS offers cloud services. The notice sent to AWS is based on the taxman’s findings that the company was imposing a fee for offering cloud computing services to Indian entities. It wasn’t, however, paying any tax on it.
In view of this, the tax department has raised a Rs 190.85 crore tax demand for the FY15 and Rs 358.27 crore for FY17 by invoking Section 147 of the Income Tax Act, according to the government officials aware of the development, cited by Economic Times. The last notice to AWS was sent in January last week, according to one official.
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Under Section 147 of the Income Tax Act, notice is required to be issued only when information with the Assessing Officer suggests that the income chargeable to tax has escaped assessment. Prior approval of specified authority is also required to be obtained before issuing such notice by the Assessing Officer.
Receipts from cloud computing services were in the nature of royalty and fee for technical services (FTS) and chargeable to tax in India, as per the findings of the I-T department. The amount also includes interest on the pending tax dues but not a penalty.
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“There are many companies which are sending huge amounts in the name of royalty payment to their parent companies just to evade tax. We have sent notices in some cases and are already in the process of sending more notices,” according to the official quoted by ET.
Meanwhile, the income tax department has also started an investigation against drug major Cipla over the allegations of tax violations and tax avoidance by the Mumbai-based multinational pharmaceutical company. The taxman had conducted a survey action against the company earlier in January.
