Nexus Matters: India's Right to Tax

In an integrating world, traditional source rules can fail to indicate the extent of a country's extraterritorial tax jurisdiction. This is especially problematic in the context of intangibles, services and financial industries. A judicial solution to the problem is the adoption of the 'nexus' principle as an interpretive strategy. For the international tax system to function effectively, deeming source rules need to be understood, not as ends in themselves, but as attempts to represent the existence of 'nexus' between the income and the state.