AndhraNews.Net - CBDT replacing circular on Taxation of IT-enabled BPO Units in India

New Delhi: August 9, 2004

CBDT had issued a Circular No.1/2004 on 2nd January, 2004 in respect of Taxation of IT-enabled Business Process Outsourcing Units in India.

Several taxpayers, law firms as well as chartered accountant firms had made representations before Finance Minister that the Circular was not clear enough and was giving rise to various controversies, particularly with reference to "core” and "non-core” activities.

Finance Minister has considered these representations and with his approval a draft revised Circular on the above subject has been prepared. The revised Circular proposes to determine the profits attributable to a Permanent Establishment on the basis of 'arm's length principles'.

It is also proposed to withdraw the old Circular No.1/2004 dated 2nd January, 2004 with immediate effect.

The draft revised Circular is being put on the website of CBDT for information of the public.

Press Release: PIB

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