Gkannan (manager) (77 Points)
03 May 2019Dear experts,
we are making consultancy charges of 5000 usd on fixed basis to foreign technicians (NRI) they are paying tax in their country (russia DTA agreement holds good) we are remitting TDS on this money transfer and bearing it as an expense. Is there a way to make the payment without deduction of TDS or what is the way out to make good the loss we are incurring interms of TDS in those payments?
Can anybody explain.
Swami Ayyappa Nuli
(TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER)
(1372 Points)
Replied 03 May 2019
No relaxation from T.D.S provisions would be available. Instead, you must convince the non-resident that T.D.S deducted u/s.195 would be available as a credit against tax payable in Russia at the time of filing of return of Income as per Article-23, Paragraph-1 of Agreement for the avoidance of double taxation and prevention of fiscal evasion with Russian Federation: by virtue of Notification: GSR 507(E) [No. 10677 (F. No. 501/6/92-FTD)], dated 21-8-1998 *
Text of India-Russia DTAA: Where a resident of Russia derives income which, in accordance with the provisions of this Agreement, may be taxed in India, the amount of tax on that income payable in India may be credited against the tax imposed on that resident of Russia. The amount of credit, however, shall not exceed the amount of the tax on that income computed in accordance with the taxation laws and regulations of Russia.
Indeed, if you failed to convince the Non-resident then T.D.S debited to profit and loss account may be disallowed as you have evidence of expenditure (Bill or Invoice as the case may be) to the extent of gross amount only.
Gkannan
(manager)
(77 Points)
Replied 06 May 2019
Thanks Mr. Ayyappa Nuli, for the guidance. As per your advice we should not bear it as an expense it should be deductible from their consultancy and remit TDS so that they can claim the same when they file their tax return.
Reg,
G.Kannan
Reg,
G.Kannan
Swami Ayyappa Nuli
(TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER)
(1372 Points)
Replied 06 May 2019
Yes, they can claim provided same income taxable in Russia also.
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