Multinationals and Indian companies spar over tax on copyright following Supreme Court ruling

Several multinationals and Indian technology companies are in a standoff over the applicability of tax on copyright after a Supreme Court ruling laid down that payments made by local users for the purchase of software from foreign companies or distributors cannot be taxed as royalty.

The question is whether Indian companies that use, sell, or market software — directly or installed in cell phones, computers etc— should deduct tax on royalty or copyright money they pay to multinationals.

Indian companies have been deducting around 10% tax on copyrights and royalties over the years, but multinationals insist that the SC ruling changes all that.