TDS liability for legal services ?

This query is : Resolved

CMA. Subhash Kumar Jha (Querist)
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25 January 2011 We have hired services of a legal firm, X, in India in relation to a multi-locational case.

Now, this firm, in this connection taken legal consultancy services of their, foreign counterparts,Y, (also a lawyer firm)to proceed the case in their country (out of India against a local company).

Now, we have got debit note from X, regarding the payments made by them to Y.

What should be the position for TDS deduction at our end ?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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25 January 2011 TDS deductible in my view as u are making payment to X in India. So TDS deductible u/s 194J.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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25 January 2011 You have hired a legal firm X. You have to make payment to X and tds will be deduct from this payment whether it payment regarding X's service or reimbursement of payment made by x to Y.
i.e tds will be deducted on this as a payment made to X.

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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28 January 2011 At the time of deducting TDS what you need to remember the entity to whome you are making the payment. Since you are making the payment to X you need to deduct the Tax u/s 194J as per prevailing rate.