my client is an ad agency. he published an ad in south african airlines magazines for his client in INdia.
Now he wishes to remit payment to the south african publication and has approached me for form 15CB.
some imp information 1. SA publication does not have any branch/office in india 2. My client will make payment through HDFC bank ltd into the current account of the non resident. 3. service is provided outside india
Is TDS applicable in this case if yes then at what rate ?
23 October 2013
Under section 195 of the Income-Tax Act, 1961 any person responsible for paying a non-resident any sum chargeable under Indian tax law shall deduct income-tax thereon at the rates in force at the time of credit of such sum to the account of the payee or at the time of actual payment thereof, whichever is earlier.
Thus TDS is required to be deducted only if the income of the advertisement provider is chargeable under India tax law. This further depends upon if the income of the advertisement provider is received in India or accrued in India or deemed to be received or accrued in India (section 9). If payment is made outside India, then it is not received in India. If the advertisement provider provides the services outside India, then the income is not accrued in India.
The advertisement company's income does not fall under the provisions of section 9, a. if the payment is made outside India, b. the advertisement company does not have (or is not available)any fixed base in India, and c. the advertisement company does not provide any services in India.
So no income tax is required to be deducted if the income of the advertisement provider does fall under the ambit of deeming provisions of section 9 of the IT Act.
in your case no tds is required to be deducted, but make sure that ad agency didnt have any permenant establishment in india.
For any further query, feel free to ask
Regards CA Harish Choudhary E-mail: harishsc1989@gmail.com
CAclubindia
