Section 195, tds on reimbursement of expenses
This query is : Resolved
19 December 2012
Broadly speaking, when a French entity seconds expatriates to an Indian entity, the French entity continues to endure social charges on these expats. Therefore, the French entity invoices the Indian entity hosting the expatriates for the reimbursement of these costs.
Assume that these payments are not made under a service agreement or anything, they are purely reimbursement of costs.
My understanding is that under Indian tax law, this kind of payment is not subject to any withholding tax (and as it is outside of the scope of any withholding tax, no PAN or specific formality is required from the French entity). Also, under the India-France DTAA, no withholding tax shall apply.
Can you confirm my understanding is correct ?
Assume that these payments are not made under a service agreement or anything, they are purely reimbursement of costs.
My understanding is that under Indian tax law, this kind of payment is not subject to any withholding tax (and as it is outside of the scope of any withholding tax, no PAN or specific formality is required from the French entity). Also, under the India-France DTAA, no withholding tax shall apply.
Can you confirm my understanding is correct ?
19 December 2012
Your thinking is correct as reimbursement does not have income element for the party which is received the money hence sec. 195 is anyway not applicable. Still you will have to get CA certificate and file form 15 CA for the remittance. for this even reference of DTAA is not necessary and amount itself is not chargeble to income tax in india.
19 December 2012
Thank u Mr. Biyani. Can u please give any case laws also supporting the query?
19 December 2012
i have made foreign payments many time for reimbursement expenses without tds under advise of different CAs. for case law you can google out.
19 December 2012
Thanks a lot for help
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