Tds on remittance to company at british virgin islands

TDS 1598 views 3 replies

Suresh

COO

29 Points Joined February 2010

1. A company formed at British Virgin Islands rendered Professional Services at Dubai, UAE to assist a company in India with Revenues (Recruitment Services).

2. Remittance has to be made to the company in British Virgin Islands.(BVI)

3. There is no Comprehensive DTAA between India and BVI.

4. Is TDS applicable u/s 195 of Income tax act considering that Professional Services was rendered by the company in BVI outside India? If Yes then what is the TDS Rate? Invoice raised on Indian company from British Virgin Islands.

Best Regards,

Suresh

Replies (3)

CA. Amit Prajapati

Chartered Accountant

118 Points Joined August 2008

The service provided by Foreign Company and the services provided is categorised under other services i.e. not under royalty or technical fess, so rate of tax will be 40% under section 195(i) further Surcharge of 2.5% if the remittance is more than Rs. 1 Crore and 3% Education Cess on Tax and Surcharge.

Prateek Agarwal

Sr. Executive - Finance & Accounts

1732 Points Joined February 2011

Agreed with Mr. Amit..

Suresh

COO

29 Points Joined February 2010

Dear Amit,

This is like a Joint Venture providing Recruitment Services to a Client in UAE. So Professional Services is Rendered abroad but Invoicing is by a company at India.

The company abroad is due for a SPLIT FEE say 50%.

Why should TDS be done?

If TDS is done how will the company abroad claim Refund of TDS?

Suresh