{"question":"Is the India–US service PE threshold 90 days or 183 days?","url":"https://lrlabs.ai/q/service-pe-90-days-india-us-treaty","law_as_at":"14 Aug 2026","facts_as_stated":{"totalDaysIndia":"120","agentType":"independent","concludesContracts":"none"},"meta":{"engine":"deterministic","llm_in_path":false,"corridor":"India–USA","latency_ms":1.12,"determinate_screen":true},"answer":{"chips":[{"label":"Service PE — high","level":"high"},{"label":"Agency PE (Dependent Agent) — low","level":"low"}],"plain_line":"Service PE exposure is engaged on these facts; the realistic defence lies in attribution, not existence.","paragraph":"A service PE prima facie arises — the aggregate presence exceeds the day threshold in Article 5(2)(l)(i). The independent-agent exclusion holds. Across the border, USA domestic law independently raises: US trade or business per se — services limb (IRC §864(b)(1)).","changers":["the day count at 89 → Service PE drops high → low","the agent's exclusivity yes → Agency PE (Dependent Agent) rises low → medium"],"deciding_facts":[],"determinacy":{"mechanical":2,"open":2,"resolved_by_composition":0,"index":0.5},"assembled":"deterministic"},"findings":[{"pe_type":"agency","pe_label":"Agency PE (Dependent Agent)","risk":"low","unsettled":false,"conclusion":"NO_DAPE_INDEPENDENT","pinpoint":"Article 5(5)","rationale":"[Article 5(5), India–USA DTAA (1990)] A genuinely independent agent acting in the ordinary course of its own business is excluded from the agency limb. (Western Union, ITAT 2007.)","missing_facts":["dealings_at_arms_length"],"authorities":[{"citation":"ADIT v. E-Funds IT Solution Inc, (2018) 13 SCC 294 (SC, 24.10.2017)","pinpoint":"para 21","element":"authority_conclude","proposition":"with no case that the Indian entity was authorised to or exercised authority to conclude contracts, and no factual foundation for any Article 5(4) clause, the agency limb fails at the threshold","disposition":"taxpayer"},{"citation":"DIT v. Morgan Stanley & Co Inc, (2007) 292 ITR 416 (SC)","pinpoint":null,"element":"authority_conclude","proposition":"a captive performing support functions without authority to conclude contracts is not a dependent-agent PE","disposition":"taxpayer"},{"citation":"Progress Rail Locomotive Inc v. Dy CIT (IT), (2024) 466 ITR 76 (Delhi HC, 28.05.2024)","pinpoint":"para 111","element":"authority_conclude","proposition":"the DAPE authority limb requires authority to conclude contracts to be conferred AND habitually exercised; with no conferral shown, habituality never arises","disposition":"taxpayer"},{"citation":"Progress Rail Locomotive Inc v. Dy CIT (IT), (2024) 466 ITR 76 (Delhi HC, 28.05.2024)","pinpoint":"para 112","element":"wholly_almost_wholly","proposition":"limb (c) requires the Indian entity to be engaged or created solely — or concerned primarily — with securing orders for the enterprise, and habitually so; a finding to that effect is a precondition","disposition":"taxpayer"}]},{"pe_type":"service","pe_label":"Service PE","risk":"high","unsettled":false,"conclusion":"SERVICE_PE_TRIGGERED","pinpoint":"Article 5(2)(l)(i)","rationale":"[Article 5(2)(l)(i), India–USA DTAA (1990)] Aggregate furnishing of services exceeds the 90-day limb. Aggregate presence of 120 days exceeds the 90-day limb. The Morgan Stanley (SC 2007) control-and-supervision test counts days where personnel remain under the foreign enterprise's direction, regardless of payroll. Judgment residue (for the case-law analysis): whose personnel-days count — control and supervision, not payroll (Morgan Stanley, SC 2007); the related-enterprise limb, Art 5(2)(l)(ii), carries NO day threshold.","missing_facts":[],"authorities":[]}],"proof":{"reading":{"id":"IN-US.LIABILITY.PROOF","instrument":"Income-tax Act 1961 · India–USA DTAA (1990)","pinpoint":"s.9(1)(i) read with s.90(2); Articles 5 and 7(1)","regime":"treaty"},"conclusion":{"label":"liability to Indian tax on the US enterprise's business profits (beyond the arm's-length fee)","kind":"PLAIN","status":"F2","line":"liability to Indian tax on the US enterprise's business profits (beyond the arm's-length fee) — FALSE — proven.","grades":{"grade":"clear","rank":5,"line":"The position is clear.","basis":"computed from the proof tree","us_grade":"will","us_line":"will — the conclusion follows mechanically from the operative text","position_view":{"position":"affirmative","grade":"untenable","line":"Corollary: the affirmative position is untenable — the position is unlikely to prevail. (no substantial authority — the position is contrary to the weight of authority)."}}},"given":{"assumptions":[],"facts_as_stated":[{"label":"income arises through a business connection in India — the domestic charge","fact":"bc_agent_route","value":false},{"label":"a person is acting on behalf of the enterprise","fact":"acts_on_behalf","value":false}],"interpretive":["Article 24 (Limitation on Benefits) is satisfied — not separately examined in this note. Circular 7/2017: avoidance sufficiently addressed by LOB leaves no occasion to invoke GAAR; but Tiger Global (SC 2026) independently analysed Chapter X-A notwithstanding treaty anti-abuse machinery — the assumption is displaceable, not absolute","the 1989 Exchange of Notes operates as agreed interpretation of Article 5(4)(c) — published in India's official compilation; untested in reported litigation","assessment year within the Income-tax Act 1961 regime (FY 2025-26); the 1961→2025 Act transition is outside this note's scope (Chapter X-A maps to ss.178-184 of the 2025 Act; Rule 10U to Rule 128 of the 2026 Rules)"]},"critical_path":[],"burden_view":{"status":"F2","resolved_by_burden":[]},"defeaters":[{"id":"gaar","label":"Indian GAAR (Chapter X-A, ss.95-102 ITA 1961; ss.178-184 ITA 2025)","authority":"AAR (Income Tax) v Tiger Global International II Holdings, 2026 INSC 60 (SC, 15 Jan 2026)","note":"an impermissible-avoidance-arrangement declaration recharacterises what the treaty form permits — s.90(2A) makes Chapter X-A prevail over the beneficial election; procedure: s.144BA reference to the Pr.CIT and the Approving Panel","computed":false,"gate":{"status":"reserved","excluded_by":null,"conditions":[{"id":"not_in_force","label":"Chapter X-A applies to assessment years beginning on or after 1 April 2018 (s.95(2)) — this assessment year precedes commencement","status":"unknown","detail":"fact 'gaar_pre_commencement' not supplied"},{"id":"threshold","label":"aggregate tax benefit ≤ ₹3 crore — Chapter X-A cannot apply (Rule 10U(1)(a); s.102(10); net basis across all parties, per arrangement per AY — Circular 7/2017)","status":"unknown","detail":"fact 'tax_benefit_cr' not supplied"},{"id":"grandfathered","label":"income from transfer of investments made before 01.04.2017 (Rule 10U(1)(d), as amended by Notif 54/2026 w.e.f. 31.03.2026)","status":"unknown","detail":"fact 'investment_pre_2017' not supplied","caveat":"for benefit years before the 31.03.2026 amendment, Tiger Global (para 46) read Rule 10U(2) to dilute the vintage cut-off where the arrangement's tax benefit arises on or after 01.04.2017; the amendment's reach into earlier years is unresolved"}],"invocation":{"label":"the Revenue invokes Chapter X-A (s.144BA reference)","status":"unknown"},"substantive":{"label":"impermissible avoidance arrangement (s.96(1))","note":"main purpose of obtaining a tax benefit — presumed from a step's main purpose, onus on the taxpayer (s.96(2); Tiger Global para 49) — plus any tainted element: (a) rights or obligations not ordinarily created between persons dealing at arm's length; (b) misuse or abuse of the Act; (c) lack of commercial substance (s.97); (d) means or manner not ordinarily employed for bona fide purposes. Judgmental — never computed by this engine"}}}],"detail_hint":"call with detail='full' for the complete condition tree and written derivation"},"formal":{"formula":"Liab ⟺ Conn ∧ Tr ∧ PE ∧ ¬ALP","residual":"Liab ⟺ ⊥","closed":true,"value":false,"open_predicates":[],"counts":{"conditions":23,"established":3,"assumed":3,"open":0,"immaterial":21,"not_made_out":4,"determined":23}},"exposure_map":[{"jurisdiction":"USA","exposure":"high","headline":"US trade or business per se — services limb","pinpoint":"IRC §864(b)(1)"},{"jurisdiction":"Canada","exposure":"medium","headline":"Withholding at source regardless of treaty outcome","pinpoint":"Income Tax Regulations, Reg 105"}],"overall_risk":"high"}