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tds Liability in case of commission (Income Tax)

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This query is : Resolved


( Author )
09 July 2007

i am not able to understand that wheather tds is deductible if commission is paid to non-residen in foreign currency,if he is providing us the service as an agent of buyer??????


Sanjeev Kumar Varshney

( Expert )
09 July 2007

Mr Sunil

Section 194H is applicable on commission paid to a RESIDENT. As you are paying commission to NON RESIDENT,section 194 H should not be applied.


sunil

( Author )
09 July 2007

Sir whether tds is 2 be deducted under any other section dealing vid nr??


sunil

( Author )
09 July 2007

plz consider whether dis commission will be income deemed to accrued in india


Monark

( Expert )
10 July 2007

The question is not clear, you must remember that if the service is rendered outside India and paid outside India, then it wont be taxable in India as it is not an Indian Income.


sunil

( Author )
10 July 2007

Sir
Actualy my Q. is about export houses who pay commission to their overseas agents for attracting buyers.
wheather tds will be liable in this case if such commission is paid in foreign currency?
i m realy confuse why tds shall not be deducted on such commission?
is the commission earned by NR for Services provided to exporte is considered as service provided outside india?


CA Prasanna Krishnan V

( Expert )
11 July 2007

The right answer is this-
As per CBDT circular no 786 dated 07.02.2000, no tax is deductible at source under section 195 in respect of commission payment directly made to NR agent operating outside the country. No arising - accruing - receiving theory applies here.


Rajesh Kumar

( Expert )
26 April 2009

Prasanna is right


taxindiaconnect

( Expert )
02 May 2009

As per CBDT circular no 786 dated 07.02.2000, no tax is deductible at source under section 195 in respect of commission payment directly made to NR agent operating outside the country for providing the sales leads etc.

In this case the TDS is not applicable as the source of earning the commission income of the Non resident is situated outside India which is the business of income from agency business.


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