AWS To Contest INR 549 Cr Tax Demand, Calls Tax Dept’s Decision Baseless

Amazon Web Services has said that it would contest the income tax department’s notice demanding INR 549 Cr in taxes on the fee earned from its cloud computing services in India.

“We believe the ITA’s (Indian Tax Authority) decision is without merit. We intend to defend our position vigorously, and we expect to recoup taxes paid,” an Amazon Web Services spokesperson said as quoted by ET.

The tax demand is based on the findings that the tech major was charging Indian companies for its cloud services and evaded paying tax on the same.

“In February 2023, we received a decision by the Indian Tax Authority (ITA) that tax applies to cloud services fees paid to the US. We will need to remit taxes on the services in question, including for a portion of prior years, until this matter is resolved, which payments could be significant in the aggregate,” Amazon said in its annual report filed with the Nasdaq.

In the report, it added that if the matter is adversely resolved, it would reflect significant additional tax expense, including taxes previously paid.

A demand of INR 190.85 Cr for 2014-15 and INR 358.27 Cr for 2016-17 under section 147 of the IT Act was raised by the IT department, which did not involve any penalty. The tax department also sent a notice to AWS at the end of January.

AWS has invested $3.71 Bn in strengthening its cloud infrastructure and generating jobs in India since the launch of the AWS Asia Pacific (Mumbai) Region in 2016, AWS’ vice-president of the worldwide public sector Max Peterson said last year.

AWS competes with the likes of Google Cloud Platform (GCP) and Azure in the segment.

According to global market intelligence firm IDC, India’s public cloud services market generated a revenue of $4.6 Bn in 2021. The report further noted that the market is projected to reach $13.5 Bn in revenue by 2026, growing at a CAGR of 24%.