Microsoft told to pay Rs 700-cr in royalty

The Income Tax Appeals Commission in Delhi has ruled that Microsoft is liable
to pay Rs 700 crore, for the six-year period from 1999 to 2004, including
interests, for licensing its products in India. Microsoft has not paid the tax
on the license fee charged to Indian users, citing several legalities including
the double taxation avoidance agreement with the US.

Tax authorities cited Microsoft's end-user agreement, which said among other
things, "the product is licensed, not sold."

According to Indian laws, a licensed product invites a royalty of 15 percent.

A Microsoft spokesperson said the firm is reviewing the appellate order and
will determine its course of further action.

The software giant can approach the Income Tax Appellate Tribunal and higher
courts against the ruling.