plz ans my query : payment is made in ITALY for professional services for providing service for incorporating a company in italy to a non resident lawyer in italy,whether this income of non resident lawyer is chargeable in india and we have to deduct TDS u/s 195 on this..
17 Replies
Pijush Roy
(ERP SAP Functional Tester)
(281 Points)
Replied 01 January 2013
Income of lawer is not cover under income tax act but tds should deductable from fees
kavitha
(studying final)
(830 Points)
Replied 01 January 2013
to my understanding, sec 195 is applicable. please check DTAA With Italy also for further info
Varshit Shah
(Self Employed)
(676 Points)
Replied 02 January 2013
How this income of NR is taxable in India?
First of all person who got the payment is Non Resident.
Secondly it is paid for Company formation in ITALY and the company was also regstd in ITALY....so there is no point where any income is generated to NR through any transaction taken place india. Only making payment will not attract TDS.
CA Sourabh Goenka
(Chartered Accountant)
(249 Points)
Replied 02 January 2013
Payment to non-resident will attract the tds provisions as well as the service tax portion also...
Akanksha Jain
(Article)
(690 Points)
Replied 02 January 2013
No.. TDS should not be deducted.. as that Non-resident is not liable to pay tax on that income to Indian Govt..
A non resident is liable to pay taxes on following income
a) Income which accrues or arises or deemed to accrue or arise in India
b) Income received or deemed to be received in India is liable to be taxed in India
in your case no condition is satisfied..
therefore NR is not liable to pay tax and hence, no TDS is to be deducted..
Akanksha Jain
(Article)
(690 Points)
Replied 02 January 2013
https://wirc-icai.org/wirc_referencer/income%20tax%20&%20wealth%20tax/Taxation%20of%20Non-Residents.htm
CA Sourabh Goenka
(Chartered Accountant)
(249 Points)
Replied 02 January 2013
@ akansha, you should notice that this transaction covers under "Income deemed to accrue or arise in india"
hence tds will be deducted. and not only tds, because of taking services from outside country, service tax liability also on the service receiptant..
Please go through the section 9 of the income tax act.
Akanksha Jain
(Article)
(690 Points)
Replied 02 January 2013
nooo.. since service is provided outside India.. how the income is deemed to be accrued in India..
and also the Indian govt. has no nexus on such income of the lawyer
Akanksha Jain
(Article)
(690 Points)
Replied 02 January 2013
pankaj
explanation inserted is for the people who is covered u/s 9(1)(v),(vi),(vii)
bt the resident making payment to lawyer is not covered u/s the above section....
EXPLANATION
u/s 9(1)(vii) in it clearly mentioned
a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India
CA Sourabh Goenka
(Chartered Accountant)
(249 Points)
Replied 02 January 2013
akansha: I think this explanation applies in case where the payment is also made from the income which is earned outside india. but in this case the payment is made from india and from the income which is earned in india...
Akanksha Jain
(Article)
(690 Points)
Replied 02 January 2013
no.. in this case.. payment is made outside India for a service provided outside India
CA Sourabh Goenka
(Chartered Accountant)
(249 Points)
Replied 02 January 2013
yes, but payment is made from the india, and source of income from which payment is made is from india.
CA Sourabh Goenka
(Chartered Accountant)
(249 Points)
Replied 02 January 2013
akansha: your explanation clearly writing that payment is made for taking services for that business which is carried outside india, but still there is no business outside india.
So for the incorporating the company, if we will take the consultancy, we have to deduct tds on that..
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