India-US DTAA Deep Dive: The 'Make Available' Clause

Why the 'Make Available' Clause Matters for US-India Cross-Border Payments

When a US company pays an Indian service provider for technical or consultancy services -- or vice versa -- the question of whether India can tax that payment at source often hinges on a single phrase: 'make available.' This two-word test, embedded in Article 12 of the India-US Double Taxation Avoidance Agreement (DTAA), has generated more litigation than almost any other provision in the treaty.

The India-US DTAA, signed in 1989 and last amended through a 2000 protocol, remains one of the most complex bilateral tax treaties India has with any country. For US companies operating in India through a wholly owned subsidiary, branch office, or even remote service arrangements, understanding the make available clause is not optional -- it directly impacts your effective tax rate on cross-border service payments.

India's domestic tax law under Section 9(1)(vii) of the Income Tax Act defines fees for technical services (FTS) broadly: any payment for managerial, technical, or consultancy services. Under domestic law (Section 115A, as raised by the Finance Act 2023), the withholding rate is 20% (plus surcharge and cess). But the India-US DTAA offers a narrower definition -- and potentially complete exemption -- if the services do not 'make available' technical knowledge to the recipient.

Article 12 of the India-US DTAA: The Legal Framework

Article 12 of the India-US DTAA uses the term 'Fees for Included Services' (FIS) rather than the more common 'Fees for Technical Services' (FTS) used in most other Indian DTAAs. This distinction is critical.

The Definition Under Article 12(4)

Article 12(4) defines fees for included services as payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services:

• (a) Are ancillary and subsidiary to the application or enjoyment of the right, property, or information for which a royalty payment is received; OR
• (b) Make available technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design.

The key phrase is in clause (b): 'make available.' If a service merely requires technical input but does not transfer usable technical knowledge to the recipient, it falls outside the scope of FIS -- and India cannot tax it at source under the treaty.

Withholding Rate Under the Treaty

When services do qualify as FIS under Article 12, the maximum withholding rate is 15% of the gross payment. Compare this with India's domestic withholding rates:

The practical implication: if your service does NOT make available technical knowledge, the withholding rate under the treaty is effectively 0% (rather than the 20%+ domestic rate). This is why the make available test is so commercially significant.

The Memorandum of Understanding: Interpreting 'Make Available'

Unlike most Indian DTAAs, the India-US treaty includes a Memorandum of Understanding (MOU) that provides interpretive guidance on Article 12. The MOU states:

"Generally speaking, technology will be considered 'made available' when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service may require technical input by the person providing the service does not per se mean that technical knowledge, skills, etc., are made available to the person purchasing the service."

The MOU further clarifies with a critical distinction:

"Similarly, the use of a product which embodies technology shall not per se be considered to make the technology available."

The Three-Part Test That Emerges

Based on the treaty text and MOU, courts and tribunals have distilled the make available requirement into a three-part test:

1. Transfer of knowledge: Did the service provider transfer technical knowledge, skills, experience, or know-how?
2. Enduring benefit: Can the service recipient apply this knowledge independently in the future, without needing to engage the service provider again?
3. Concrete form: Does the transferred knowledge exist in some concrete, usable form -- such as a technical plan, process document, or methodology that the recipient retains?

If any one of these three elements is missing, the payment likely does not constitute FIS under the DTAA.

Which DTAAs Have the Make Available Clause?

The make available clause is not universal. Only certain Indian DTAAs include it. Understanding which treaties contain this provision helps US companies assess their exposure relative to competitors operating from other jurisdictions.

Countries without the make available clause -- such as Germany, Japan, and France -- have a broader FTS definition. Payments from India to entities in those countries are more likely to be taxable at source. This gives US, UK, Canadian, and Singaporean service providers a structural advantage when dealing with Indian clients. See our India-US DTAA vs India-UK DTAA comparison for a detailed side-by-side analysis.

Landmark Court Rulings on the Make Available Clause

Indian courts and the Income Tax Appellate Tribunal (ITAT) have built a rich body of case law interpreting the make available requirement. Here are the rulings every US company operating in India should know.

1. Raymond Ltd v. DCIT (ITAT Mumbai)

In this foundational case, the ITAT held that management consultancy services provided by a US firm did not constitute FIS because the consultancy did not transfer any technical knowledge that Raymond could independently apply. The services consumed expertise -- they did not transfer it. This case established the principle that consuming a service is different from acquiring the underlying skill.

2. Timken Company (ITAT Kolkata)

The ITAT ruled that advisory services rendered by a US company to its Indian affiliate could not be treated as fees for included services under Article 12(4)(b) because no technology was 'made available.' The advisory work required the US company's continued involvement -- the Indian entity could not replicate the advice independently.

3. Korn Ferry International (ITAT Delhi)

Executive search and recruitment advisory services were held not to satisfy the make available condition. The court found that while the services were technical in nature, they did not transfer any recruitment methodology or process that the Indian client could use independently for future searches.

4. AWS Cloud Services (Delhi High Court, 2025)

In a significant recent ruling, the Delhi High Court held that payments for Amazon Web Services cloud infrastructure did not qualify as royalty or FIS under Article 12 of the India-US DTAA. The court reasoned that AWS support was ancillary to enabling customers to use the cloud platform and did not satisfy the make available clause -- customers could not independently replicate AWS's cloud technology.

5. Invesco (ITAT Delhi)

Cost-to-cost reimbursements for IT support services between a US parent and its Indian affiliate were held not to qualify as FIS. The tribunal emphasized that no technical knowledge was 'made available' to the Indian affiliate -- the IT support merely kept systems running, it did not transfer skills.

Key Takeaway From Case Law

The consistent judicial position is clear: the mere provision of services requiring technical expertise does not, by itself, satisfy the make available test. The service must result in the transfer of knowledge that the recipient can apply independently, without further recourse to the service provider.

Practical Scenarios: What Qualifies and What Does Not

To make this actionable for US companies, here is a scenario-based analysis of common cross-border service arrangements.

Services That Typically DO Make Available

• Training programs where the US company trains Indian employees on proprietary software, leaving them capable of operating it independently
• Transfer of process documentation -- such as SOPs, technical manuals, or manufacturing processes that the Indian entity retains and can apply
• Development of custom software with full source code handover, enabling the Indian company to maintain and modify the software independently
• Engineering designs and technical plans delivered in usable format -- the classic example of 'development and transfer of a technical plan'

Services That Typically DO NOT Make Available

• Management consulting where the consultant provides recommendations but does not transfer a replicable methodology
• Cloud computing services (AWS, Azure, GCP) -- the customer uses the technology but cannot replicate it
• Legal and tax advisory services -- the client receives advice but not the legal knowledge itself
• Market research reports -- the client receives findings but not the research methodology
• IT support and maintenance -- keeping systems running without teaching the client to do it themselves
• Recruitment/executive search -- the client receives candidates, not recruitment skills

For US companies paying for services from India -- or Indian subsidiaries paying their US parent for management fees -- the distinction is commercially significant. Consider structuring intercompany service agreements with clear documentation of what knowledge (if any) is being transferred. This directly impacts transfer pricing arrangements and the withholding tax obligations.

Interaction With Permanent Establishment Rules

The make available analysis does not exist in isolation. It intersects critically with permanent establishment (PE) rules under Article 5 of the India-US DTAA.

Key rule: If the US service provider has a PE in India, the FIS provisions of Article 12 do not apply. Instead, the business profits are taxable under Article 7, and the effective tax rate jumps to 35% plus surcharge and cess (approximately 38.22% for foreign companies).

This means a US company must consider two sequential questions:

1. Does it have a PE in India? If yes, Article 12 is irrelevant -- profits are taxed at 35%+.
2. If no PE, do its services make available technical knowledge? If no, the payment is not taxable in India.

Common PE triggers for US companies in India include maintaining an office, having employees stationed in India for extended periods (the 90-day service PE threshold under the India-US DTAA), or having a dependent agent who habitually concludes contracts. See our guide on DTAA complete guide for foreign companies for the full PE analysis.

Compliance Requirements: Form 15CA, 15CB, and TRC

Even if a payment does not qualify as FIS under the make available test, the payer still has compliance obligations when making cross-border remittances.

Step 1: Obtain a Tax Residency Certificate (TRC)

The US service provider must furnish a valid Tax Residency Certificate issued by the IRS (Form 6166 in the US context). Without a TRC, the Indian payer cannot apply treaty benefits and must withhold at the higher domestic rate.

Step 2: File Form 10F

If the TRC does not contain all required particulars (such as the taxpayer's status, nationality, and period of residential status), the non-resident must also file Form 10F with the Indian tax authorities.

Step 3: Obtain a CA Certificate (Form 15CB)

For remittances exceeding INR 5 lakh in a financial year, the Indian payer must obtain a Chartered Accountant's certificate in Form 15CB. The CA must certify the applicable DTAA rate and confirm that the make available test has been evaluated.

Step 4: File Form 15CA

The payer files Form 15CA online before making the remittance. This form reports the nature of the payment, the applicable DTAA article, and the tax withheld (if any).

Getting this process wrong can result in the Indian tax department demanding withholding tax at the domestic rate (20%+), plus interest at 1% per month under Section 195 of the Income Tax Act. The compliance burden underscores why proper classification of services under Article 12 is essential.

Strategic Structuring for US Companies

US companies can take several practical steps to manage their make available exposure in India:

1. Draft Service Agreements Carefully

Intercompany service agreements between a US parent and its Indian subsidiary should explicitly state whether the services involve transfer of technical knowledge. If the services are advisory or operational in nature, the agreement should specify that no proprietary methodology, process, or technical plan is being transferred.

2. Maintain Contemporaneous Documentation

Keep records of what deliverables were provided. If the deliverable is a report, advice, or recommendation (rather than a process, methodology, or technical plan), document this clearly. In any future transfer pricing audit, this documentation will be your primary defense.

3. Separate Bundled Services

If a single engagement includes both make-available services (e.g., training with process transfer) and non-make-available services (e.g., ongoing advisory), consider splitting them into separate agreements with separate pricing. This allows the non-FIS portion to claim treaty exemption while only the FIS portion is subject to 15% withholding.

4. Consider the PE Implications

Before invoking Article 12, ensure no PE risk exists. If US employees regularly visit India for service delivery, track their days carefully against the 90-day service PE threshold. Exceeding this threshold makes the entire Article 12 analysis irrelevant.

5. Obtain Advance Rulings

For large or recurring payments, consider applying to the Board for Advance Rulings (BAR) in India for a binding determination on whether specific services constitute FIS. The ruling provides certainty and prevents future disputes. The advance ruling process typically takes 3-6 months.

Impact on Common US-India Business Models

The make available clause affects different business models differently. Here is how it applies to the most common arrangements between US and Indian entities.

IT Services and Software Development

This is the largest category of US-India cross-border services. If an Indian IT company provides software development services to a US client, the payment is typically not FIS -- the US client receives a product (software), not the development skills. However, if the Indian company provides training that enables the US client's team to maintain the software independently, that training component may qualify as FIS.

Management and Shared Services

US parents often charge Indian subsidiaries for management services, shared services, or cost allocations. If these services involve strategic advice, HR support, or financial oversight, they typically do not make available technical knowledge. The Indian subsidiary receives the benefit of the service, not the capability to replicate it.

Technology Licensing

Licensing of technology, patents, or trade secrets is covered under the royalty provisions of Article 12, not the FIS provisions. However, if the license includes a component of technology transfer and training, that component may need to be separately evaluated under the make available test.

For a comprehensive overview of FDI advisory services and how to structure your India entry, including DTAA planning, contact Beacon Filing for a consultation. For more information on how DTAA benefits work in practice, see our articles on how to claim DTAA benefits in India and withholding tax rates by country.

Key Takeaways

• The 'make available' clause in Article 12 of the India-US DTAA creates a narrower definition of taxable technical services than India's domestic law -- potentially reducing withholding tax from 20%+ to 0% on qualifying payments.
• Services that merely require technical expertise but do not transfer usable knowledge to the recipient are NOT taxable as FIS under the treaty.
• Indian courts have consistently held that management consulting, cloud services, IT support, and recruitment advisory do not satisfy the make available test.
• US companies should structure service agreements carefully, maintain documentation, and separate bundled services to maximize treaty benefits.
• Always ensure no permanent establishment risk exists before relying on Article 12 -- a PE triggers 35%+ taxation regardless of the make available analysis.