FOreign payment

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visu iyer (Querist)
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24 January 2009 Comrades,

Pl. clarify...
My client needs to pay some amount to Foreign citizen..(as business commission)

How this amount to be paid, and what are the tax implication.

The amount could be roughtly INR Rs.1 lac

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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24 January 2009 Check with section 195 of The Income Tax Act,1961 and see whether the case fit into the conditions therein. Also provisions of DTAA with that country may be looked into.

Dayal

Dayal (Expert)
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25 January 2009 Hi, Regarding Income tax my friend has already clarified.

With respect to Service tax this would be subject to service tax under Import of services rules and being a recipient service tax has to be paid under BAS ( Business Auxiliary Services as it falls under the 3rd category, in relation to business and commerce. Once paid this amount can be availed as cenvat input credit or you can seek refund in terms of the provisions.

Should you need for clarification, provide inputs on the nature of transaction and the reason for payment of commission

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