TDS U/S 195
This query is : Resolved
01 July 2010
whether payment made to china for exhibition expenses is liable for TDS u/s 195? If yes or no why?
01 July 2010
In the given situation, TDS liability is not applicable u/s 195 of Income Tax Act since the payment is remitted directly abroad and it is not taxable in india as per CBDT Circluar No. 786 dated 7-2-2000 attached.
. It had been clarified then that where the non-resident agent operates outside the country, no part of his income arises in India. Further, since the payment is usually remitted directly abroad it cannot be held to have been received by or on behalf of the agent in India. Such payments were therefore held to be not taxable in India. The relevant sections, namely section 5(2) and section 9 of the Income-tax Act, 1961 not having undergone any change in this regard, the clarification in Circular No. 23 still prevails. No tax is therefore deductible under section 195
Also service tax liability arises on this transaction under import of service rules by the receiver of service in india.
. It had been clarified then that where the non-resident agent operates outside the country, no part of his income arises in India. Further, since the payment is usually remitted directly abroad it cannot be held to have been received by or on behalf of the agent in India. Such payments were therefore held to be not taxable in India. The relevant sections, namely section 5(2) and section 9 of the Income-tax Act, 1961 not having undergone any change in this regard, the clarification in Circular No. 23 still prevails. No tax is therefore deductible under section 195
Also service tax liability arises on this transaction under import of service rules by the receiver of service in india.
01 July 2010
i ASSUMED IN ABOVE REPLY EXHIBITION EXPENSE TO CHINA TO THE PERSON NON-RESIDENT WHO HAS PROVIDE SERVICES OF EXHIBITION IN CHINA ITSELF.
01 July 2010
Dear BK, I would like to correct on this. As per article 6 of DTAA Between India and China, the income from immovable property shall be taxable in the country in which the property is situated. What I understand from the exhibition services, the service can only be provided in form of renting of space or construction of stall. Assuming the it is renting of space, the income will be from the immovable property, hence taxable in China only. If it some other service also, again on the assumption of being provided in China, it will be taxable in China under article 7 of DTAA. The circular which has been cited by you is applicable only on sales commission, and now has been withdrawn by CBDT.
01 July 2010
CBdt withdraw circular on which date.
01 July 2010
Dear Rajesh Ji,
Thank for giving feedback.
Please provide me date of withdrawn of that circular , becasue we have to made a payment to China for professioanl services provided by a lady in china. Our Auditor provide me above ciruclar reference to non deduction of tds. Please give reply asap.
Thank for giving feedback.
Please provide me date of withdrawn of that circular , becasue we have to made a payment to China for professioanl services provided by a lady in china. Our Auditor provide me above ciruclar reference to non deduction of tds. Please give reply asap.
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