TDS
This query is : Resolved
03 October 2009
Dear All,
One our client has to pay a huge amt to their foreign counter parts for the services they render to them in India. Foreign company's contention is that they want the entire payment due to them without TDS deduction. If that is done the same amt becomes inadmissible to my client. Also they have to pay a penalty for non deduction. Can I save my clients in this situation. Kindly advise.
One our client has to pay a huge amt to their foreign counter parts for the services they render to them in India. Foreign company's contention is that they want the entire payment due to them without TDS deduction. If that is done the same amt becomes inadmissible to my client. Also they have to pay a penalty for non deduction. Can I save my clients in this situation. Kindly advise.
04 October 2009
Since the services are rendered in India , 195 is attracted, sec 5 also seems to be attracted . no way you can save yr clients , unless they are ready to bear the tds burden .
explain the foreign company this situation , and ask them to file a return and claim back the amount as refund , if they believe that their income is not taxable in india .
If they still insist that their income is not taxable in india,(according to sec 5 )
TDS shudnt be deducted , as the income itself is not taxable in india according to them .Make an application to advance ruling authority and sort out the issue .
It should be noted that they can also claim a credit of the taxes paid in india under DTAA of the applicable country .
explain the foreign company this situation , and ask them to file a return and claim back the amount as refund , if they believe that their income is not taxable in india .
If they still insist that their income is not taxable in india,(according to sec 5 )
TDS shudnt be deducted , as the income itself is not taxable in india according to them .Make an application to advance ruling authority and sort out the issue .
It should be noted that they can also claim a credit of the taxes paid in india under DTAA of the applicable country .
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04 October 2009
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05 October 2009
I agree, yes, either grossup and bear the TDS or check sec 9 whether the income itself is not taxable in India, if yes, then no TDS.
Also refer DTAA for lower tax rate and also intimate the Foreign Co if Tax paid in India can be setoff against tax liability at foreign Origin
Also refer DTAA for lower tax rate and also intimate the Foreign Co if Tax paid in India can be setoff against tax liability at foreign Origin
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