Delhi ITAT Allows US LLC to Avail India-US Tax Treaty Benefits

By: Admin
October 14, 2024
Categories: ITAT | News
4 Min Read


The Delhi Income Tax Appellate Tribunal (ITAT) has ruled in favor of a US-based Limited Liability Corporation (LLC), allowing it to benefit from the India-US tax treaty. This landmark judgment addresses long-standing litigation over the residential status of US LLCs and their eligibility for treaty benefits.

The ruling comes in the case of General Motors Company USA, which offered to tax income at 15% as per Article 12 of the treaty. However, the Indian tax authorities argued for a 25% tax rate, stating that the LLC, being fiscally transparent in the US, should not qualify as a US resident for treaty purposes. The ITAT decision aligns with previous judgments, favoring US LLCs and fiscally transparent entities (FTEs) in similar situations.

Experts believe the ruling could have broader implications, potentially benefiting S Corporations and encouraging revisions to clarify treaty access for fiscally transparent entities under the India-US DTAA.


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