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TDS deducted by Indonesian company

anoop (g.m accounts) (214 Points)

03 January 2020

We are giving some service to one Indonesian company by going to Indonesia. They have informed us that they will be deducting TDS of 20 percent while making the payment. Our company don't have any office in Indonesia. How can we avoid this TDS or if they deduct and give us the certificate than whether can we claim the same in India? how

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4 Replies

Ashok Kumar (CA qualified) (389 Points)
Replied 03 January 2020

We can analyse the DTAA between India and Indonesia and see whether the service you are providing enjoy any exemption from taxation or reduced taxation. Even if we they deduct tax, you can claim the credit of such taxes against tax payable in India, subject to some restriction by filing Form 67

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anoop (g.m accounts) (214 Points)
Replied 03 January 2020

Thanks Mr. Ashok, kindly clear one more thing, as to whether the process will be same if it is for company I. e the tax deducted by the foreign company is of Indian company as in form 67, it looks that it is for individuals Residents indian

Ashok Kumar (CA qualified) (389 Points)
Replied 04 January 2020

Form 67 is a common form for all residents and restricted only to individuals. To the extent possible, avoid or minimise the tax withholding by resorting to tax DTAA benefits as the entire amount of credit may not be available through filing of Form 67 and hence, balance becomes additional cost

CA Arun Tiwari (Partner) (6460 Points)
Replied 06 January 2020

If TDS has been deducted on your income you are allowed to take credit of such taxes. For this purpose, reference has to be made to the relevant Double Tax Avoidance Agreement (DTAA) of the country where such income has been earned. India has entered into DTAAs with several countries. DTAA makes sure that a taxpayer is not doubly taxed for the income earned outside the country of residence.

Taking benefit of a DTAA involves obtaining a Tax Residency Certificate (TRC) that helps identify and certify your tax residency status to make sure the correct DTAA has been applied.

So if u giving your services in indonesia and they are deducting tax in the form of tax,then you can take credit or avail such deducted tax in your Income declared in india . These all be suject to the DTAA agreement that India must entered with that Indonesia.