Costs cross-charges are not FTS and FIS: Delhi HC Sets aside order rejecting Application for ‘NIL’ withholding tax

The Delhi High Court has set aside an order rejecting an application for Nil Withholding Tax, ruling that "costs cross charges" are not Fees for Technical Services (FTS) or Fees for Included Services (FIS). The court clarified that inter-company allocations for shared costs, which do not involve specialized technical knowledge or services, should not be subjected to withholding tax under these categories. This decision provides significant relief to multinational corporations engaged in intra-group cost-sharing arrangements, reducing their tax burden and compliance complexities. It clarifies the scope of FTS/FIS, ensuring that genuine cost reimbursements are not mistakenly categorized as taxable services.