Withholding tax on intercompany transactions

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 August 2012 My client is an Indian WOS of a foreign Comp. Foreign company has paid some of the expenses ( Professional Fees, Lawyers Fess)out of India in other currency on behalf of Indian WOS and later debited these expenses to Indian WOS. In the books of Indian Company these expenses are debited to P&L and Credit goes to Inter company. My Querry

1. Whether Indian WOS is liable to Withholding tax/TDS deduction and payments?

2. Whether TDS needs to be deducted and deposited by Indian WOS?

3. What are other tax implications on such cross boarder transactions on Indian WOS?

Amol S Joglekar

Amol S Joglekar (Expert)
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01 August 2012 There is no exemption for any such arrangement on account of withholding tax. Even for payments, the question of PAN becomes very important.

Vishal D Shah

Vishal D Shah (Expert)
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01 August 2012 1. Tds provisions not applicable to foreign holding company while making payments for the expenses. Further no tds is required on reimbursement.
2. No.

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Querist : Anonymous

Querist : Anonymous (Querist)

19 August 2012 Thanks for advice but my question is

a) If Indian WOS credits to Parent Company thru Inter company credit for such payments then whether it will be required to deduct and deposit TDS on such Inter company credits ?

b) Does it not attract section 195 when we make credits to parent company thru intercompany for expenses paid by them on behalf of Indian WOS ?

Please advice....

Querist : Anonymous

Querist : Anonymous (Querist)