The Indian Finance Ministry’s decision to place a tax on firms in the country’s booming outsourcing industry is unlikely to have a negative effect on growth in the multi-billion dollar sector, according to Shantanu Rudra, Chief Financial Officer of Daksh eServices, one of India's largest ‘BPOs’ enterprises.
Rudra was responding to a recent circular issued by the ministry stating that tax will be levied on multinational firms operating permanent BPO operations in India if the services provided relate to the firm’s core business.
"US companies outsourcing to India will be able to set off taxes paid in India against taxes paid in America under the (Avoidance of) Double Taxation Treaty between India and the US. So there will be no financial impact on the US companies," observed Rudra, according to the Times of India.
"It will mean nothing for a US company beyond a cash-flow imbalance for some time. They will pay the tax here, then set it off with taxes paid in the US," he added.
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