09 December 2009
Dear Sir, Are we suppossed to deduct TDS on payment made to foreign vendor (NRI, no PE in India) on account of purchase of images from them? and if yest then at what rate we deduct TDS? Thanks & Regards CA. Praveen Gupta 09718715456
09 December 2009
It depends on what basis you purchase the images. If they have the ownership of images and you have been given a right to use the images as a one time lump sum royalty, then you have to deduct TDS on Royalty and FTS. If the images are used for a project that is deemed approved under the Industrial Policy in Force, then you deduct 10% TDS otherwise you deduct 30% if payee is individual and 40% + surcharge for others other than domestic companies. If you bear from your own pocket you gross up and pay. If you acquired them on internet using personal credit card, if it is for personal use, no need to deduct TDS. If for business and you already paid full amount, then gross up and pay TDS or you will not be allowed the expense. If you use it for business, you also have to pay service tax. Service Tax will be on invoice + TDS (if you bear it from your pocket).
As you seem to be CA having to issue a Form 15CB, verify the bill and exactly the terms of transfer of images to determine if there is any royalty element in the same.
11 December 2009
The Crux of Sec 195 is that, when u make the payment to a Non-Resident, then u should see whether the income which he earned in India is Chargeable to tax in India. whether the Income accrues or arise in India.
CAclubindia
