Some MNCs may face tax heat as SC clears air on MFN applicability

The issue emerged when India signed treaties with other nations, including Slovenia, Lithuania, and Colombia, and fixed a lower rate (5 per cent withholding tax)

Multinationals from the most-favoured jurisdictions such as the Netherlands, Switzerland, and France, which have been taking advantage of lower taxation applicable to other nations that signed tax treaties with India at a later stage, might have to pay additional levies to the Indian tax authorities.
 

The Supreme Court on Thursday settled the long-standing issue regarding the applicability of the most favoured nation (MFN) clause, denying the lower withholding tax rates on dividend payouts and other relevant remittances as interpreted earlier by these countries.
 

The MFN status allows further easing of tax rates if India offers a lower rate through a