Permanent Establishment Issues in Indian Outsourcing Transactions

India has emerged as one of the leading destinations for outsourcing of operations by multinational companies in recent years. One principal source for the low costs is the tax reductions available due to Double Taxation Avoidance Agreements between India and the parent country of the company. The author in this essay discusses the concept of permanent establishment (PE), a very important aspect of tax liability governed by such agreements. Providing a useful introduction to the workings of these agreements, the author moves to discuss the two primary kinds of PE\u27s, engaging with pertinent case law on the issues involved therein. In light of the increased attempts of taxation authorities to use this permanent establishment concept to widen the tax net, the essay assumes great importance and practical value