SC’s Nestle ruling may lead to flurry of tax notices to MNCs

Since the ruling has been delivered while setting the tone of interpretation of MFN clauses, it is likely that the tax department may open past years through issuing notices for TDS assessment, the time limit for which is 7 years prior in case of resident taxpayer. Also, it will be interesting to watch whether the TDS liability that will be determined through this ruling, i.e. shortfall between tax deducted on reduced rates vs. tax that should have been deducted at applicable rates, will have ramification under prosecution provisions under income tax.

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