Question

However, it is possible that the non -resident entity may have a business connection with the resident Indian entity. In such a case, the resident Indian entity could be treated as Permanent Establishment of the non-resident entity. ___ During the last decade or so, India has seen a steady growth of outsourcing of business processes by non-residents or foreign companies to IT-enabled entities in India. Such entities are either branches or associated enterprises of the foreign enterprise or an independent India enterprise. The nonresident entity or foreign company will be liable to tax in India only if the IT-enabled BPO unit in India constitutes its Permanent Establishment.

• A. The tax treatment of the Permanent Establishment in such a case is under consideration.
• B. How would the profit would be shared is not decided yet?
• C. A lengthy and cumber some process requiring a lot of application of mind and revenue principles is ahead for the tax department of India.
• D. A new trend is seen in last decade.
• E. Indian companies have a lot on stake as competition increases.

Answer 1

The correct option is D A new trend is seen in last decade.

The second sentence--- In such a case.....Indian entity could be treated..... Again the sentence that runs after the blank... During the last decade or so, suggests option (d), a new trend is seen in last decade is the correct choice.