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Tds on payment received from foreign company

Madhu H S ( ) (114 Points)

09 November 2012

Please give your opinion on the below mentioned case:

Mr. A is collecting information on various medicines, their side effects etc. in india and upload this information to a web portal of an US company. The US company makes payment to him for the same through regular banking channels.

Queries:

1. Whether US company need to deduct TDS while making payment to Mr.A ?

2. Is this income is accrued in USA and taxed in USA ?

3. Can Mr. A claim any relief under DTAA if the same has been taxed in USA ?

Note: The US company does not have any permanent establishments or any agents in India.

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3 Replies

Ashok J (CA Final) (880 Points)
Replied 10 November 2012

In my opinion,

This income is accruing in India and taxable in India. For the company, whether to deduct TDS or not, it depends upon US tax law. If Mr. A is suffering double taxation, refer DTAA....

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KARANDEEP,CA,B.Com,CS FNL (JOB) (457 Points)
Replied 10 November 2012

Originally posted by : MADHU H S
	Please give your opinion on the below mentioned case: Mr. A is collecting information on various medicines, their side effects etc. in india and upload this information to a web portal of an US company. The US company makes payment to him for the same through regular banking channels. Queries: 1. Whether US company need to deduct TDS while making payment to Mr.A ? 2. Is this income is accrued in USA and taxed in USA ? 3. Can Mr. A claim any relief under DTAA if the same has been taxed in USA ? Note: The US company does not have any permanent establishments or any agents in India.

Answer

1.No, US company is not reqiured to deducted the TDS.

2.Income is Accuring in India and taxable in india.

3.Yes Mr. A can claim the relief.

Thanks & Regards

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7024 Points)
Replied 16 November 2012

Originally posted by : MADHU H S

Please give your opinion on the below mentioned case:

Mr. A is collecting information on various medicines, their side effects etc. in india and upload this information to a web portal of an US company. The US company makes payment to him for the same through regular banking channels.

Queries:

1. Whether US company need to deduct TDS while making payment to Mr.A ?

Although the answer shall depend on the complete facts, but I feel that we can call the services provided by Mr. A as professional services in terms of Article 15 of India -USA DTAA , then no TDS should be deducted from US.

2. Is this income is accrued in USA and taxed in USA ?

The Income is accruing in India and should be taxed in India if provisions of Article 15 of India -USA DTAA are met.

3. Can Mr. A claim any relief under DTAA if the same has been taxed in USA ?

If income is taxed @ 15% (worst schenario) then definitely credit of tax deducted in US should be available in India.

Note: The US company does not have any permanent establishments or any agents in India.

Anuj

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