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tds on payment of import of goods

sajid (c a) (44 Points)

11 September 2007

wheter tds is to be deducted while importing trading goods from foreign buyer under section 195 ? if not what note should be put in CA certificate annexure b to be given to the remitting bank as per new RBI guidelince.

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5 Replies

siddharth (C.A.) (175 Points)
Replied 12 September 2007

Hi, Tds has to be deducted or not u/s 195 will depend on whether or not Foreign Co. has Permanent Establishment(P.E.) in India or Not. In col.7 of the RBI guideline u can mentioned that "According to information provoded by the beneficiary , it has no P.E. in India. Also u have to obtain undertaking from Foreign co. stating that it has no P.E. in India. Also in Col.8 u mentin that " The amt. to be remitted represent consideration for a sale effected by the receipient outside India. As such Income in the hands of the receipent arising out of sale cannot be said to have accrued or arise in India. Notwithwithstanding the same, in terms of Aricle 7 dealing with business profit of DTAA between India and -----( write name of country where buyer resides), profit of the entreprises shall be taxable only in ------( country of buyer) unless the entreprises carry on business in India thru P.E. U will have check whethe Buyers ' country have DTAA with India.

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(Guest)

Please also consider if the remittances is to be made is in respect of royalty or payments for the technical or managerial services, than on such payaments TDS is invariably is required to be deducted and deposited before the remittances for the same is made and also R & D Cess is paybable thereon is also needs to be examined

siddharth (C.A.) (175 Points)
Replied 14 September 2007

Hi Pradip, Can u please through some light on the R & D cess applicability? If possible can u please provide some URL or Word document in this regard. Thanks in Advance.

(Guest)

No , You need not to withhold TDS from foreign payments to be made for importing Good.

(Guest)

What is the tax incident on my wife and me if I decide to gift here some money by way of cheque? I am regular taxpayer with salary, Interest and rental income whereas my wife has only interest from interest and that to below 10K