Tds on professional fees

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

15 June 2012 Can Professional fees be paid on behalf of sister company without deducting tds as the sister company is not resident in India. Is TDS applicable ?

CA Atul

CA Atul (Expert)
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15 June 2012 TDS on payments to non resident consultant. Section 195 of the I T Act states that before any payment is made to a non resident , tax should be deducted at source.However , section 195 is applicable only if the payment to non resident is taxable in India under I T Act. Therefore , the issue whether the consultancy fee paid is taxable in India. Section 5 provides that in case of non resident income deemed to arise or accrue shall be taxable under I T Act. The income deemed to arise or accrue is defined under section 9 which under Clause (vii) of subsection 1 of section 9 is specific to deeming provision in case of ‘fees for technical services” under which your payments to US company certainly falls. The said clause provides as under
9(1) The following incomes shall be deemed to accrue or arise in India.

Querist : Anonymous

Querist : Anonymous (Querist)

15 June 2012 My question was that we resident Pvt Ltd co and have paid professional fees to Prof consultant on behalf of our sister concern which is not based in India, for this payemnt of Prof fees we have not deducted tds as we are paying on behalf of the sister concern which is not liable to deducted tds as non resident status ? is it right ? Pls explain

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Querist : Anonymous

Querist : Anonymous (Querist)