withholding tax on reimbursement of expenses

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G Muralidharan

G Muralidharan (Querist)
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12 December 2009 Whether withholding tax under Sec195 for Reimbursement of expenses on cost to cost basis would apply.

Barun Kumar Ghosh

Barun Kumar Ghosh (Expert)
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12 December 2009 Section 195 casts a responsibilty on the payer to deduct tax at source from any payment of interest or other sum (other than salary ), which is chargeable to tax under the income-tax Act. If the income is chageable to tax in India, then only the person making payment to non-resident is liable to deduct tax at source under section 195.Reimbursement of expenses to a non-resident on cost to cost basis does not have any element of income. Therefore, there is no requirement to deduct tax at source.