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Import of Goods

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Querist : Anonymous

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Querist : Anonymous (Querist)
11 January 2011 Indian Railway Company importing goods from German Company(Lukas).There is no separate charge for installation.The price specified in the invoice is for supply of material only. However the installation will be done by some Indian company.They receive compensation from from that German company.
The Indian railway company is detaining 10% tax as withholding tax.
Now my question is whether that railway company is correct in doing so or not?
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CA Shailesh Kumar Bhagat

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CA Shailesh Kumar Bhagat (Expert)
11 January 2011 TDS will apply in this case since this is a case of combind contract. Indian compny is doing installation on behalf of German compnay. as per ther contract term , this is responisbility of german company to install the machinary.

As per section 195 , rtae of tax should be 40% on profit ( which is 10% ), the net rate of tax is 4%.
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