We, an Indian company , are getting Commercial loan from abroad, a foreign company, having no establishment in India, is liaisoning for it for a service fee . Will we have deduct tax for that service fee ? Please suggest and oblige.
ssd pande (CEO) (24 Points)
11 May 2012We, an Indian company , are getting Commercial loan from abroad, a foreign company, having no establishment in India, is liaisoning for it for a service fee . Will we have deduct tax for that service fee ? Please suggest and oblige.
CA. CS. Khushboo Dodhia Vora
(Practicing Charatered Accountant)
(125 Points)
Replied 11 May 2012
hi
The Indian company needs to deduct TDS on the SErvice Fees if the loan so raised is utilized / affects the business operations of the Indian Company in India.
However one also needs to check the definition of "Fees of Technical Services" in the respective DTAA between India and the country of Residence of Foreign Company, if any. If one gets the exemption from the definition as per DTAA, then there would be no liability on the part of Indian Company to deduct TDS on Service Fees.
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7024 Points)
Replied 12 May 2012
I hope that the loan being taken from abroad is as per the FEMA guidelines on ECB.
Anuj
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