McKinsey a KPO not BPO rules India’s Supreme Court in tax dispute
A special leave petition (SLP) filed by McKinsey Knowledge Centre against a Delhi high court order has been denied by India’s Supreme Court in a blow to the global consulting firm. Instead, the high court affirmed an Income Tax Appellate Tribunal’s (ITAT) order that ruled that the research and information services offered by McKinsey India to its associated enterprise should be categorized as high-end knowledge based research services (KPO), and not business process outsourcing (BPO) services. The distinction is significant because it impacts on the tax that the consultancy will have to pay. The Supreme Court also supported the ITAT order regarding interest on delayed realization of receivables. It deemed it to be a separate international transaction that needs an independent benchmarking.
