Tds on royalty

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

18 March 2013 Dear Professional Colleagues,

Please advice me Is TDS applicable on reimbursement of Royalty payment to a party.

eg. X paid royalty to Y and now X want reimburse of Royalty from us . Is there any TDS deduction required at the time of reimbursement of Royalty to x?

Regards.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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18 March 2013 Surely yes. But the basic question is that why would X pay royalty payable by your Company.

Anuj
femaquery@gmail.com

Querist : Anonymous

Querist : Anonymous (Querist)

19 March 2013 Dear Sir,

Thanks for your response.

There is a contract between our company and X to complete a project in which X required professional services of Y company. Y comapny is shareholder company of our company so X enforced us to pay royalty directly to Y company. But for avoiding tax procedure and ralated party transaction we made work order according to that X will pay royalty to Y and we reimburse payment of Royalty to X.

Now X has paid royalty to Y without deducting TDS and raise an Invoice to us mentioning Reimbursement of Royalty on behalf of ....company (mentioning our company name).

so there is no deduction made by X and they mentioned our company name on Invoice.

My concern is that not single TDS has been made by any company and government not got TDS amount yet.
In invoice it has been clearly mentioned that royalty payment has on behalf of our copmany so who will be ultimate responsible for TDS deduction.

Kindly resolve the issue.
Thanks for your kind support.

Regards.

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