India

India

February 01, 2003
India claimed the right to tax the owner of satellites on rentals it collects for use of its satellites by a television company that beams programming across Asia,including into India.

The satellite owner — AsiaSat — is based in Hong Kong.  It has no other business connection with India.  Nevertheless, a tax appeals tribunal in New Delhi said that AsiaSat had to pay tax to India because the television channels that paid for the use of its satellites were engaged in business there and were essentially paying “royalties” to AsiaSat for use of a “process” in India.  The appeals tribunal treated the payments as for use of the intellectual property embedded in the satellites rather than for the equipment itself.

Meanwhile, the Hindustan Times reported that the finance minister, Jaswant Singh, plans to announce in his budget speech to parliament this month that the government will abolish long-term capital gains taxes for foreign institutional investors.