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Tax (tds) on commission payment

pankaj birdi (Others) (37 Points)

19 April 2014

An Export Agent in Australia brings an Export Order from Philippines for Indian company. Against this order, Indian company has to pay some commission to the Export Agent.

Now i want to know whether Indian Company need to deduct the TDS on the commission payment to be paid to Export Agent or not?

If yes, how much percentage of TDS will be dedcuted.

Export Agent has no relations with India and is native of Australia.

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16 Replies

Deepak Tapse (Accounts Manager - Taxation) (1771 Points)
Replied 19 April 2014

If service is renderd in abroad then no need to deduct TDS

1 Like

Income Tax Wala: (Fin. Expert) (Chartered Accountants) (2015 Points)
Replied 19 April 2014

any technical consultancy, commission, royalty etc. payment made outside india than TDS rate applicabl is either 20% or 25%

pankaj birdi (Others) (37 Points)
Replied 19 April 2014

He just procures an order for Indian company. No technical consultancy is taken from the Export Agent. Still confused whether to deduct TDS or not?

sourav jain (INTERNAL AUDITOR) (128 Points)
Replied 19 April 2014

Hello

No tds need to be deducted , since the service recd outside india and the agent does not have any business connection or business establishment in India , commission income earned does not accrue or arise in india , hence his income is not taxable in India so NO TDS

1 Like

Shreyansh Gupta (Article Assistant) (27 Points)
Replied 20 April 2014

commission paid to non resident first this remmittance will be business income second since services are rendered outside india hence no income accrue or arises in india hence no tds liability will arise.

GREESHMA.A (Student) (32 Points)
Replied 20 April 2014

TDS has to be deducted u/s 195 and 15cb has to be issued by a CA .....

GREESHMA.A (Student) (32 Points)
Replied 20 April 2014

Tds has to be deducted u/s 195

Trainee (Accounts Executive) (325 Points)
Replied 20 April 2014

Greeshma is absolutely correct..

pankaj birdi (Others) (37 Points)
Replied 20 April 2014

It's making lot of confusion what to do on this TDS issue. Deduct Or not? Read some articles that a new circular was published and it says not to deduct TDS. But you people are professionals and are CAs and know better than anyone. Badly looking for a relevant information on it.

sanchit jain (self) (58 Points)
Replied 20 April 2014

Refer to India Australia treaty regarding double taxation avoidance agreement for applicability of applicable deduction of tax in India on income distributed abroad

GREESHMA.A (Student) (32 Points)
Replied 20 April 2014

Tds has to be deducted @ 10.3%or 20.6% whichever is applicable...refer rule 37BB of income tax rules and check whether 15cb or 15ca is applicable...also submit form A2 while making foreign outward payment...also check the double taxation avoiidance agreement of India with Australia for commmission and whether any other rate of tds is applicable... Please do correct me if I am wrong