Assignment of Contracts
This query is : Resolved
20 October 2009
An existing software development company wants to transfer its existing customer contracts to another overseas company. The terms of the assignment will be such that the overseas company will do the balance billing on the clients and the indian company will bill the overseas company at an agreed man month rate for the work that will be carried out by the employees of the indian company on the contracts.
How should this assignment of contracts be structured? Will any provisions of the IT Act be attracted?
An existing software development company wants to transfer its existing customer contracts to another overseas company. The terms of the assignment will be such that the overseas company will do the balance billing on the clients and the indian company will bill the overseas company at an agreed man month rate for the work that will be carried out by the employees of the indian company on the contracts.
How should this assignment of contracts be structured? Will any provisions of the IT Act be attracted?
20 October 2009
Let me know the transactions in detials. Whether he exisiting software comapny is an Indian Company or overseas company. Further, is there any agreement betweent the overseas co. and the existing co,etc, can you bifurcate the entire contract amount.
In relation to IT Act, Transfer Pricing, TDS, etc.
In relation to IT Act, Transfer Pricing, TDS, etc.
21 October 2009
Hi,
The existing software company is an indian company. It has a wholly owned subsidiary company overseas. This overseas company has formed a JV (30%:70%)with another overseas company. Now the indian company wants to enter into an agreement with this JV company to assign its existing ongoing contracts in India and overseas.
Its proposed that the future billing for the balance work on the assigned contracts will be done by the JV company and the revenue will accrue to it. It will however take the help of the indian company (basically the employees) for rendering the services on these contracts for which the Indian company will bill the JV company at an agreed man month rate for using its employees.
Hope these details will suffice. Pls do let me know your views on how to structure this agreement and what are the provisions of the IT Act that one should bear in mind.
The existing software company is an indian company. It has a wholly owned subsidiary company overseas. This overseas company has formed a JV (30%:70%)with another overseas company. Now the indian company wants to enter into an agreement with this JV company to assign its existing ongoing contracts in India and overseas.
Its proposed that the future billing for the balance work on the assigned contracts will be done by the JV company and the revenue will accrue to it. It will however take the help of the indian company (basically the employees) for rendering the services on these contracts for which the Indian company will bill the JV company at an agreed man month rate for using its employees.
Hope these details will suffice. Pls do let me know your views on how to structure this agreement and what are the provisions of the IT Act that one should bear in mind.
27 November 2009
Hi,
Under IT Act, you have to keep in mind that the withholding taxes under section 195, transfer pricing rules, principles, PE concept, etc. The agreement should be very clear about the nature of services. The terms and conditions between Indian company and overseas JV since if the Indian company is providing manpower (i.e employees only) to the project directly to the overseas JV it would attract services to the Indian Company (however, can export without payment of ST).
Hope the above clarifies you.
Under IT Act, you have to keep in mind that the withholding taxes under section 195, transfer pricing rules, principles, PE concept, etc. The agreement should be very clear about the nature of services. The terms and conditions between Indian company and overseas JV since if the Indian company is providing manpower (i.e employees only) to the project directly to the overseas JV it would attract services to the Indian Company (however, can export without payment of ST).
Hope the above clarifies you.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- ITC temporary reversal and reclaim
- GST on export of services and Input Credit
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- RCM INVOICING FROM NOV-2024
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- Should I report my US salary for January, February, March in Schedule FA?
- Sale of property furniture sale
- Confusion around Form 26QB fields
- Adjustment entry in the case of Individual and HUF on 31st March
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
Trending Online Classes
CAclubindia
