TDS on payment to foreign companies
This query is : Resolved
30 December 2010
In case of Foreign companies service tax liability is on service receiver. Please advice while deducting Tax @ 20% or other rate service tax portion shall be added or not
30 December 2010
TDS will be deducted on Gross amount.
02 January 2011
In case of import of services as per Sec 66A of the Finance Act 1994 read with the Service Tax valuation rules 2006, tax has to be paid by the reciver. In this case the invoice that will be raised by the foreign service provider will be only for the services that are rendered by him.
Sec 195 of the act is applicable on payments to non residents, which mentions that tax is to be deducted on any sum chargeble under the provisions of the act. Also specifies "Any person responsible for paying to a non resident...."
In this case the amount is not even paid to the non resident, it will be remitted to the local service tax authorities.
Hence there is no need for any TDS deduction by grossing up the service amount with the service tax payable.
Sec 195 of the act is applicable on payments to non residents, which mentions that tax is to be deducted on any sum chargeble under the provisions of the act. Also specifies "Any person responsible for paying to a non resident...."
In this case the amount is not even paid to the non resident, it will be remitted to the local service tax authorities.
Hence there is no need for any TDS deduction by grossing up the service amount with the service tax payable.
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26 April 2011
In my view TDS should be deducted after adding service tax ,although there is no ruling or clarity in the matter.
Anuj
0-9810106211
Anuj
0-9810106211
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