Tds on payment to service provider outside of india

TDS 704 views 3 replies

NR_london

Director

24 Points Joined February 2016

Hello, I have a service provider (IT and Marketing person) working for me outside of India (UK, US and Australia). These service providers has no base in India or has no relation with India except that I hired them to work for my company in those countries. Now when I have to make the payment, do I deduct any TDS? If yes, then how is this person going to claim TDS which we deduct in India because he/she has not base here in India? And I am wondering if thats the case then what if my clients from US, UK and other foreign countries start deducting TDS in their country before sending the payment to me then how would I claim that? Any help is much appreciated. Many Thanks.

Replies (3)

CA Mehul Chudasama

Chartered Accountant

618 Points Joined February 2015

No TDS was required to be made because payment of commission are made to non-resident overseas agent. As such no income is arising to the non-resident agent in India. So, no TDS is deductible u/s 194H of the Act, which is applicable for resident Indians only, even the provisions of section 195 is not applicable as payments are made to non-resident overseas agents for the services rendered outside India.

ACIT Vs Nidhi Export (ITAT - Delhi)

valji

Accounts manager-MBA

2150 Points Joined July 2008

agree with above reply

Ashish Bansal

1036 Points Joined February 2008

When the IT and Marketing services are provided outside india, the income of that Non Resident will not be treated as earned in India. Therefore applicability of Section 195 (Payment to Non Resident) will not be there. Payment would also be made in Forex.

You may go ahead for making such payments without any deduction of TDS. But, you should keep sufficient records (i.e. Agreement / contract) with you to justify that payments made was for and on account of that Agreement / contract.

You may also need to provide such documents to you CA for issuing you Form 15CB and for submission of Form 15CA to Income Tax Department.