—Guide
Fees for Technical Services and the 'Make Available' Clause in India's Tax Treaties
How India taxes fees for technical services paid to non-residents, and how the 'make available' clause in some treaties narrows what's taxable.
Payments for services to foreign providers are one of the most common cross-border transactions for Indian businesses — and one of the most disputed. Whether India can tax them often depends on a single phrase in the relevant tax treaty: 'make available'. This guide explains it.
Fees for Technical Services Under Indian Law
Under Indian domestic law, fees for technical services broadly cover payments for managerial, technical or consultancy services. The definition is wide, and such fees paid to non-residents are generally taxable in India, subject to specified exceptions.
How Treaties Change This
Tax treaties define fees for technical services in their own terms. Some treaties follow a broad definition similar to Indian law. Others — including India's treaties with countries such as the US, UK, Singapore and the Netherlands, among others — use a narrower test in some form: the services must 'make available' technical knowledge, experience, skill, know-how or processes.
What 'Make Available' Means
Broadly, technical knowledge is 'made available' when the recipient acquires it in a way that lets them apply it independently in future, without the provider. Services that simply deliver a result — without transferring the capability — generally don't make knowledge available.
- Likely not making available: routine consulting advice, data processing, standard IT support, marketing services.
- Likely making available: training programmes that transfer skills, supply of designs and technical plans the recipient can reuse.
The answer depends closely on the facts and the contract.
If the Fee Isn't Taxable as Technical Fees
If a service fee falls outside the treaty's technical fees definition, it may be treated as business profits, taxable in India only if the provider has a permanent establishment here.
Documentation
- The contract, clearly describing the services and deliverables.
- The recipient's TRC and Form 10F.
- A declaration that the provider has no PE in India.
- A CA's analysis, often in Form 15CB, before remittance.
Getting Help
Think Filing analyses foreign service payments under the relevant treaty and documents the withholding position.