Neha Jain (CEO) (28 Points)
15 October 2011I am form India
We have taken few dedicated servers on lease basis from a US based company. They have no permanent establishement in India hence no PAN card available in India.
Will TDS deduction will still applicable for payment made tru wire transfer to USA?
Please give me detail.
sudarshan
(CA)
(745 Points)
Replied 15 October 2011
yes, it may be treated as royalty since you have in your possession servers(access). so withholding is applicable
Neha Jain
(CEO)
(28 Points)
Replied 15 October 2011
But how they will get credit as they have no establishment in india. Also without PAN 20% TDS is applicable.
sudarshan
(CA)
(745 Points)
Replied 15 October 2011
the NR may apply for AAR or the co may apply to local AO for nil / lower deduction of tax. If the payment is going to be regular, it is advisable for the NR company to obtain PAN after ascertaining taxability from ITax
Neha Jain
(CEO)
(28 Points)
Replied 15 October 2011
But Foreign company do not want to do any formality in India :(
What is option
sudarshan
(CA)
(745 Points)
Replied 15 October 2011
option:
1.Indian co to apply for nil deduction , if refused(then point no.2)
2.indian co bear the tax burder (grossing up)
Neha Jain
(CEO)
(28 Points)
Replied 15 October 2011
Plz explain
Indian co to apply for nil deduction
sudarshan
(CA)
(745 Points)
Replied 15 October 2011
The indian co may apply us 195 to the ITO (request letter) , to make payment to NR without deduction of source. The ITO/AO may either accept or reject the application. In my opinion, tax is deductible, the company may apply indicating no tax payable. If tax is payable, with the order, the company may ask the NR company to apply of PAN in India.
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7024 Points)
Replied 15 October 2011
I beg to disagree with the other Expert.
It can't be said with surety that TDS shall be needed to be deducted on such payments.
It ultimately boils down to the wording and nature of the agreement between the Indian and US party, which shall decide the taxability of said income in India.
May be if I have the copy of same i shall be able to help.
Anuj
+91-9810106211
femaquery @ gmail.com
Neha Jain
(CEO)
(28 Points)
Replied 16 October 2011
Thak you Anuj Sir,
I have sent a Docs, which I received from US vendor on your gmail ID
Please check and revert if TDS is still applicable in India
Regards
Neha
Rahul Gupta
(Chartered Accountant)
(644 Points)
Replied 16 October 2011
@ CA ANUJ GUPTA
Sir i am eager to know the response you have suggested to Neha Jain. I want to know the result and your advise to. Kindly also post some details like the total payment to be made, in which currency, etc.
I won't demand to post any information which might be objectionable by the real owner of this thread.
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