Query on tds for contractors for software company

Mary Parmar (Managing Invoices) (24 Points)

30 November 2015  

Hi,

We are a software firm based in Ahmedabad. Our 100% invoicing/jobs are from US clients. No work/clients in India.

Our accountant suggests that since we do not work for Indian clients, we are exempted from Service Tax. Is it correct?

And also they suggested a way to save taxes, is to transfer the payments in someone else's accounts and just deduct/pay 1% TDS.

They have given us many accounts in which we transfer by check Rs 100,000 every month in each account and they charge 5% for "such service", and in return they give us 95,000 back by cash. That is, just showing bank entries to show expenditures.


Is this a good option or legal to do so?

Thanks,
Mary