06 November 2012
Yes, TDS would be deducted under section 195. If respective foreign company does have PAN in India, tax would be applicable as mentioned in section 195. But if not then @ 20%, or mentioned under section 195, whichever is higher.
07 November 2012
Mr Path you have mentioned being purchased for hire. Purchase and Hire are two different way.
In case it is purchase then no TDS and in case on HIRE then TDS is applicable.
Before you remit the consideration to foreign you will follow the procedure of Form 15CA and 15CB. CA's certification is required before you do it. Facility is available to gross up the payment so that foreigner get the amount of their invoice after TDS in case of HIRE. CA will inform you the amount of TDS and Grossed up amount.
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