DyStar Holding Pte Limited (DyStar), a leading global dyestuff and chemical manufacturer based in Singapore, sought guidance on the implications of royalty fee withholding tax and potential penalties due to non-payment in India. Majmudar & Partners provided comprehensive legal assistance to navigate the complexities of Indian tax regulations.

Facilitating the Transaction

Majmudar & Partners provided legal counsel to DyStar by:

• Analyzing Withholding Tax Obligations: Assessed the applicability of India’s withholding tax on royalty payments, considering the recent increase in rates from 10% to 20% as per the Finance Act, 2023.
• Evaluating Double Taxation Avoidance Agreement (DTAA) Benefits: Examined the India-Singapore DTAA to determine if a reduced withholding tax rate could be applied, thereby mitigating the tax burden.
• Calculating Potential Penalties and Interest: Estimated the financial impact of non-compliance, including penalties and interest, to provide a clear picture of potential liabilities.
• Advising on Compliance Measures: Recommended steps to rectify past non-compliance, such as filing necessary returns and remitting overdue taxes, to minimize legal repercussions.
• Implementing Robust Tax Compliance Framework: Developed strategies to ensure timely and accurate future compliance with Indian tax laws, preventing recurrence of similar issues.

Through Majmudar & Partners’ expert guidance, DyStar effectively addressed its withholding tax obligations and mitigated potential penalties in India. This proactive approach not only ensured compliance with Indian tax laws but also safeguarded the company’s financial interests in the region.

Majmudar & Partners specializes in providing tailored tax advisory services to international companies operating in India. Contact us today to ensure your business remains compliant with Indian tax regulations and to optimize your tax strategies.