TDS & service tax on services provided by NR outside india.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2010 Dear All,
Our company has imported some finished goods of automobiles parts from China.
We have appointed a person in china, He will visit different factoreis of automobile manufacturer and provides us the details of products that they made and selling price etc . The such person provide us a bill summary in which he charges from us regading his serives and reimbursement of his fooding, hotel accomdation, conveyance etc. Total amount is to be pay 850USD.

Now Services are provided outside india in china and payment is to be made outside india (china).
Whether tds u/s 195 is to be deducted or not.

Whethere any service tax liablitiy is there ?

Please reply with supporting documents.

Prem Ketan

Prem Ketan (Expert)
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02 July 2010 Yes, TDS is applicable on the service charges not on the reimbursment of expenses if you will get the actual supporting of the expenses.
This comes under professional fees.

see the double tax treaty between india and china

Service tax applicability i don't know

Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2010 As per article 14 of DTAA with CHINA : No tds will be deducted .

Article 14: Independent personal services - 1. income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that Contracting State except in one of the following circumstances, when such income may also be taxed in the other Contracting State :

(a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State;

(b) if his stay in the other Contracting State is for a period or periods exceeding in the aggregate 183 days in the taxable year concerned; in that case, only so much of the income as is derived from his activities performed in that other Contracting State may be taxed in that other Contracting State.

2. The term professional services includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

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