Income Tax department issues Rs 549-crore tax demand notice– Check reason

The income tax department has imposed a ₹549 crore demand notice on Amazon Web Services (AWS), an arm of ecommerce major Amazon that offers cloud services, government officials aware of the development told ET.

The notice sent to AWS is based on the taxman’s findings that the company was imposing a fee for offering cloud computing services to Indian entities. It wasn’t, however, paying any tax on it.

tax department detected that AWS was charging a fee for providing cloud computing services to Indian entities but not paying tax on it, they said.

Amazon India didn’t respond to queries.

The department has raised a ₹190.85 crore tax demand for the FY15 and ₹358.27 crore for FY17, invoking Section 147 of the Income Tax Act. The last notice was sent in the last week of January, said one official.

The assessing officer can issue a notice under Section 147 of the Income Tax Act if there is reason to believe some income chargeable to tax has escaped assessment.

The department claims that the receipts from cloud computing services were in the nature of royalty and fee for technical services (FTS) and chargeable to tax in India. The official added that the amount also includes interest on the pending tax dues but not a penalty.

Another official said that the department had shortlisted many companies that were transferring money to their parent companies but were not paying taxes.

“There are many companies which 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,” the official added.

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