Applicability of Sec 195 to import of service

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This query is : Resolved

NISHANT PAREKH (Querist)

15 September 2010 An assessee is dealing in foreign package business. He organises foreign tours and collects fees from indian tourist. He tie ups with foreign travel agent to manage for Hotel & tour in abroad..

Indian assessee makes payment to foreign travell agent as and when he goes to foreign with the tour.

He makes the payment in foreign currencies which is purchased from india from foreign exchanger..

My query is whether sec 195 will be applicable to it ? or it will be considered as outright purchase and he will not be liable to deduct TDS..

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)

16 September 2010 sec.195 will not be applicable, since service is provided in abroad as well as payment is also made in abroad.

CA Apurav Agawal

CA Apurav Agawal (Expert)

18 September 2010 Shailesh is right sec 195 will not be applicable in this case because the income of the foreign tour operator is not liable to be taxed in India.

So, remitter of funds need not deduct TDS on the payments.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)

18 December 2010 I beg to differ as the income of the tour operator is coming from Indian citizens going abroad and the same is being shared with the foreign tour operator. Kindly further clarify the exact nature of services performed by the foreign party.

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