The Supreme Court upheld the Delhi High Court's ruling, clarifying that payments for Amazon Web Services cloud services are not subject to tax as royalties or technical fees unless there is a transfer of technology.
Supreme Court Affirms No Tax on AWS Cloud Payments as Royalties
The Supreme Court of India has upheld a ruling from the Delhi High Court, which clarifies that payments made for Amazon Web Services (AWS) cloud services should not be classified as taxable royalties or technical fees under Indian tax law. This decision is particularly crucial for companies engaging foreign service providers.
In its ruling, the Supreme Court emphasized that only payments involving actual transfers of technology or intellectual property rights would be subject to taxation under these classifications. This distinction is pivotal for companies to ensure compliance with tax obligations while leveraging cloud services for their operations.
“Cloud service payments do not qualify as royalties unless associated with the transfer of technology,” the court stated.
As this ruling sets a significant precedent, it reassures businesses using cloud services about their tax liabilities. Practitioners should note this decision when providing advice related to international transactions involving technology services.
Citations
- Amazon Web Services v. Union of India (2026) AIR 2026 SC 256
