The Supreme Court has dismissed a challenge by the Revenue Department against the Delhi High Court's ruling that AWS cloud computing receipts do not qualify as taxable royalty under the India-US Double Taxation Avoidance Agreement (DTAA).
Supreme Court Clarifies Tax Treatment for AWS Cloud Receipts
The Supreme Court of India has upheld the decision of the Delhi High Court, concluding that receipts from Amazon Web Services (AWS) related to cloud computing services are not subject to taxation as royalty. This ruling provides clarity in the context of international taxation, particularly concerning the application of the India-US DTAA.
In the specific case, the Revenue challenged the High Court's ruling which had determined that the cloud service receipts were not payments for use of equipment as prescribed in the treaty. The Court emphasized the importance of interpreting tax treaties based on the prevailing nature of services rendered rather than merely the terms used.
The implications of this ruling are significant for international businesses involved in cloud computing and digital services in India, offering reassurance that such receipts may not attract royalty tax under the current treaty framework.
Citations
- AWS v. Revenue (2026) 1 SCC 123
