Withholding tax rate on remittance of Web Service Charges to AWS USA has been lower down

Hon’ble Delhi High Court in its recent ruling1 has reduced the withholding tax rate on the payment of web service charges by the Amazon Web Services India Pvt Ltd. (‘AWS India’) to AWS USA from 16% to 8%.

AWS India is engaged in the business of reselling web services to the third-party customers in India. In pursuant to the Reseller Agreement, AWS India propose to make a payment to AWS USA for the purchase of web services. An application has been filed under S.195(2) of the ITA to AO for determination of withholding tax rate applicable on such payment.