Microsoft told to pay Rs 700-cr in royalty

MUMBAI, INDIA: The Income Tax Appeals Commission in Delhi has ruled that Microsoft is liable to pay Rs 700 crore, for the six-year period from 1999 to 2004, including interests, for licensing its products in India.

Microsoft has not paid the tax on the license fee charged to Indian users, citing several legalities including the double taxation avoidance agreement with the US.

Tax authorities cited Microsoft's end-user agreement, which said among other things, “the product is licensed, not sold."

According to Indian laws, a licensed product invites a royalty of 15 per cent.

A Microsoft spokesperson said the firm is reviewing the appellate order and will determine its course of further action.

The software giant can approach the Income Tax Appellate Tribunal and higher courts against the ruling.