Amazon Web Services served Rs 549 crore income tax demand notice: Report

AWS: The income tax department has reportedly raised the demand for Rs 190.85 crore tax for 2014-15 and Rs 358.27 crore for 2016-17 by invoking Section 147 of the Income-tax Act

The Income tax department (I-T dept) has sent a tax demand notice of Rs 549 crore to Amazon Web Services (AWS), a report by The Economic Times (ET) said. This is based on the findings that the tech major was imposing a fee for offering its cloud services to Indian companies. This fee is taxable in India, but AWS reportedly evaded the tax. 

The income tax department said that the receipts from cloud computing services were in the nature of royalty and fees for technical services (FTS).

The tax department has reportedly raised the demand for Rs 190.85 crore tax for 2014-15 and Rs 358.27 crore for 2016-17 by invoking Section 147 of the Income-tax Act. The department also sent a notice to AWS in January end. The amount does not involve any penalty. 

The development follows a tax evasion probe against pharma major Cipla. The I-T department had launched an investigation over allegations of tax violation by the drugmaker in January. On 31 January, the I-T department conducted a survey against Cipla.

"There are many companies that are sending huge amounts in the name of royalty payment to their parent companies just to evade tax. We have sent notices in some cases and are already in the process of sending more notices," an official told ET.

In August last year, the income tax department had provisionally attached the fixed deposit accounts of Xiaomi India on the grounds of attempted tax evasion. It alleged that the company reduced its taxable income in India by paying royalties to entities located outside.