14 May 2014
Whether payment of Telephone and internet charges paid to foreign companies for use in India through credit is allowed and if TDS/ withholding tax is applicable?
14 May 2014
Recently, the Bangalore Bench of the Income tax Appellate Tribunal (the Tribunal) in the case of Clear water Technology Services (P) Ltd (the taxpayer) held that the payments to a foreign telecom company for voice charges are in form of service charges, and since the services are not of managerial, technical or consultancy nature it cannot be tax as‘Fees for Technical Services’ (FTS). S ince the taxpayer had no obligation to deduct tax at source from payments made to such foreign company, the amount cannot be disallowed under Section 40(a)(i) of the Income tax Act, 1961 (the Act)
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