Hike in withholding tax rate: Indian arms of MNCs may not feel sharp pain

India's tax treaties with most major economies cap withholding tax on royalties and technical fee at 10%

Listed Indian subsidiaries of global multinationals (MNCs) spent nearly Rs 7,000 crore on payment of royalty and technical fees to their parent companies in CY21/FY22. More than half the amount (Rs 3,770 crore) was paid out by do­m­estic subsidiaries of Euro­pean and American MNCs, such as Hindustan Unilever, Nestlé India, Colgate-Palmolive, BASF India, and Bosch, according to Capitaline Database.

The Indian subsidiaries of these MNCs were, so far, paying a withholding tax at the rate of 10 per cent on payment of royalty and technical fees to their parent. The finance Bill, cleared by Parliament on Monday, has now doubled