Singh said in India payments for imports of all types of software have been treated as royalty. He said the Supreme Court had held that computer softwares are goods and, therefore, chargeable to sales tax. However, for customs duty purpose, software is being treated as intangible good.
Referring to the FIIs, Singh said the cumulative net investment by FIIs at the end of March 2006 was $ 45.3 billion. As on March 31, 882 FIIs have been registered with Sebi. Foreign institutional investments made by residents of other countries treat the income as business income and in the absence of permanent establishment in India, they claim exemption. Earlier Sebi allowed FIIs to make investments only, but now it has permitted them to operate in the debt market and trade in the derivatives market. So there is a need to have a set of guidelines as far as taxation of FIIs is concerned, said Singh.