TDS Deduction for entities not having permanent establishmen

TDS 1458 views 3 replies

Abdul Muneem

Director

24 Points Joined March 2011

Hi all,

This is my first post on this forum. We are facing a problem relating to TDS. I hope some of you in the forum can be of help to us. We are technology company and we are authroized reseller for Google Apps (This is a emailing service similar to gmail or rediffmail or hotmail). This is hosting services from Google. Google Ireland will be billing Brio. Brio will do billing to its customer. We get some x percentage on the hosting services provided. Eg: - Brio will bill its customer100/ - and Google Ireland will bill Brio $2 (Rs. 95/-) and the difference is our earning.

My first question is what is the percentage of TDS to be deducted by our customers for such services? Will it be under 194C or 194J?
Google Ireland does not have any permanent establishment in India. They do not have any PAN number. So are we liable to deduct TDS when we make payments to them. And if we are supposed to deduct how we should remit the TDS when they do not have any PAN here?

India had DTA (Double Taxation Agreement) with Ireland.

I hope to hear from any one of you soon.

Regards

Abdul Muneem

Replies (3)

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

1) the said product or service is your trading item, so this does not comes under preview of TDS, TDS is the system to deduct / withhold the taxes on your expenses not the purchase,

2) such transactions are contracts for providing services so 194C applies, ( for your buyers)

3) if u want to deduct taxes , then ask ireland party to apply for PAN in india,

NIKITA

302 Points Joined February 2011

It would be covered u/s 194C. TDS will definitely be deducted. If the Co. does not have PAN then as per section 206AA the rate would be 20% even for foreign Co.. As per DTA if the rate is less than 20% then rate would be applicable. As DTA overrides section 206AA.. AND also while making remittance you have to file form 15CA & 15CB..

E.Kumaran

Manager Accounts & Finance

24 Points Joined July 2010

Dear Forum Members

Can anyone answer my query related to the Attraction of Income Tax or TDS under Section 195 of the IT Act, 1961 with respect of the following case :-

1. Where a Foreign Company (Registered in Bahrain - There is no DTAA between India & Bahrain) enters into agreement with Indian Company or Indian Government Companies for carrying out Technical Consultants for Infra Projects on the contract basis for a specific project ?

a ) Will be liable to pay a Income Tax under Act ?

b) If TDS is to be deducted from the payments to foreign company ?

(i) At What Rate - If company do not have the PAN no

(ii) If the company have the PAN No.

Thanks & Regards

E.Kumaran