Home Economy Court ruling on Morgan Stanley to ‘reassure’ MNCs: Nasscom

Court ruling on Morgan Stanley to ‘reassure’ MNCs: Nasscom


New Delhi : A verdict given by India's apex court Monday on the tax issues relating to global investment major Morgan Stanley's BPO unit has given "reassurance" to other multinationals running similar operations in the country, a leading IT industry body said Tuesday.

The Supreme Court Monday ruled that the income earned by Morgan Stanley's Indian BPO (business process outsourcing) unit is not taxable.

"The judgment and overall principles affirmed by the court will provide reassurance to multi-national companies with regard to the operation of their captive BPOs in India. It has also served to clear the unnecessary uncertainty on some of the taxation issues," National Association of Software and Service Companies (Nasscom) said in a statement.

"The ruling delivered yesterday by the Supreme Court in the matter of Morgan Stanley settles significant issues of principles in taxing the foreign entities who outsource their activities to their captive Indian companies," it said.

The body has also suggested setting up of an 'Advance Pricing Mechanism' by the government that would allow the taxpayers to disclose all relevant facts to tax authorities and obtain a binding ruling on the tax consequences.

"Almost every other sizeable tax jurisdiction in the world provides an Advance Pricing Mechanism, including the US, Canada and Mexico, almost every European country, China, Taiwan, Korea, Japan, Australia, etc. India too needs to immediately put in place an APA mechanism," Nasscom said.