MUMBAI: Global payments companies such as Visa, Mastercard and American Express may have to pay around 15% tax on their India income as they set up servers locally to comply with a central bank directive on data storage.
The Reserve Bank had ordered payments companies to locally store data on all transactions taking place within India from October 15. Visa, Mastercard and American Express said they had taken steps to comply with the regulation.
These companies are currently out of the tax net in India, as they do not have a ‘permanent establishment’ in the country — they operate here through offices in jurisdictions such as Singapore and store data on servers located in countries like the US and Ireland. Permanent establishment, or place of business, is a concept in taxation that determines where an organisation is required to pay tax.
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