Tds over foreign outward remittance

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Nandakumar T S (Querist)
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10 May 2013 Is TDS applicable while making a Foreign Remittance from India on a Service Contract Invoice,payee Corporate refuses to lose any portion on Gross Invoice Value, stating deductions is inacceptable & is not applicable on their land in any form.
Country under discussion is The Netherlands

Nandakumar, BLR

Deepak Agrawal

Deepak Agrawal (Expert)
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10 May 2013 In this case, the cost of tax will be borne by the payer. In this case, either the terms & conditions should be specified in the contract that if any payment is liable to tax in India will be borne by whom i.e. by payer or payee.

very important:-Further, it need to be analysed that what is nature of service. if it falls within the beneficial provision of the DTAA between Indian and Netherlands. it may be exempted as per DTAA if covered. So just check Article 12 and 15. link of DTAA is as under:

http://law.incometaxindia.gov.in/DIT/File_opener.aspx?fn=http://law.incometaxindia.gov.in/Directtaxlaws/cbdt/dta/A1_Netherlands.htm

Even after applying DTAA, tax applies on such payments, then payer have to pay tax by grossing up the payment with prevailing tax rate else it may be assessee in Default.