09 May 2009
let me know the tax implication in following case.
my client is providing clearing & forwarding services in india and also getting cleared & forwarded by clearing & forwarding companies outside india.
Situation : My client got a consignment cleared from custom by an american clearing & forwarding company. the american company raised a bill for providing service in america but my client credited his account for the bill amount but did not pay in monetary form because there was mutual agreement that my client will provide ticket whenever american company's employee comes in india. the american company employee came and my client provided ticket and debited his account for the cost of ticket.
Please suggest me tax implication keeping in view DTAA with America.
09 May 2009
No TDS is applicable as the clearing and forwarding services as provided by the American Company is not taxable in India for the following reasons -
1) The services are provided in India 2) The services are not covered under the definition of technical services with the meaning of article 12 of DTAA between India and USA. 3) The source of income of the American company is located outside India. 4) Deeming provisions of section 9 do not apply to forwarding and clearing services.
09 May 2009
The first one is a typo mistake. Read it as USA inplace of Japan. The tickets are being provided in lieu if payment for the clearing services bill, Instaed of paying cash, you are making payment in kind. hence not an income is being received here in India.
Sorry, I am unable to understand on which basis this transaction is not liable to TDS. Whether because of DTAA or TDS provision. Please explain with reason.
CAclubindia
