Recognition of income received by a foreign company

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Querist : Anonymous

Querist : Anonymous (Querist)

19 September 2012 Suppose XYZ ltd. is an Indian company and it renders service to a foreign company and raises bill amounting rs. 10 lac to the foreign company but the foreign company pays only rs. 9 lac to the Indian company and balance rs. 1 lac pays to it's own government(foreign govt.). There is no DTAA between the two companies.

My question is...
how much income will be recorded in the books of Indian co. either rs. 10 lac or rs. 9 lac
please refer relevant section.

Thanks in advance

Amol S Joglekar

Amol S Joglekar (Expert)

19 September 2012 The bill raised is booked at 10 lakh. The payment of 1 lac, assuming to be WHT (with holding tax), average rate of tax can be worked out in case there exists no DTAA.

Querist : Anonymous

Querist : Anonymous (Querist)

20 September 2012 But such income is not a foreign income (i.e. it is an income which is deemed to be accrue or arise in India).

CA. Anuj Gupta

CA. Anuj Gupta (Expert)

01 October 2012 The Income shall be booked as 10 lakh and rs. 1 lakh shall be booked as TDS.

You can take credit of the same under section 91 on Income Tax ACt.

Anuj
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