If payments made by an Indian company to a foreign corporation for computer software services are considered “fees for technical or included services,” they may be subject to taxation in India at a rate of 20% on a gross basis (this rate may be lowered by regulations of a DTAA between India and the foreign company’s home country). If the transaction is categorized as capital gains realised by a foreign firm on the sale of a capital asset located in India, it will be taxed in India as long or short term capital gains, based on how long the foreign company owned the asset. Capital gains from a capital asset of this sort held for more than 36 months are classified as long term capital gains and are taxed at a rate of 20%, whereas capital gains from a capital asset kept for less than 36 months are classified as short term capital gain and are taxed at a rate of 40%.