Could payments for domain name registration be characterized as royalties? The Indian tax authorities have sought to answer that question in the affirmative. It has also been a central issue in recent tax litigation in India. Earlier, the Income Tax Appellate Tribunal (ITAT) had upheld the tax authorities’ position, based on a Supreme Court decision and a decision of the Delhi High Court. Just recently, however, an Indian High Court has dealt with this issue, which warrants our attention.

This article analyses the approaches adopted by the ITAT and the High Court. For instance, is a domain name and intellectual property like a trademark? Could the domain name registrar be regarded as owning the domain names and, therefore, granting the license (to its customers) for use of the domain names?