is TDS on webhosting service from aboard?

This query is : Resolved

Sumeet (Querist)
Follow

29 May 2008 is TDS applicable on foreign payments for webhosting ?

my arguments or points

a. this service comes under royalty services. we are paying royalty for usage of their software and computer for a price.

b. the company is based in USA and does not have any Permanent Establishment in India. so NO income accrues in India.

c. Service is rendered abroad and payment is also made in foreign currency directly abroad.

d. most of my clients are located aboard.

e. there was a case where an Indian company WIPRO subscribing to an Online database of a foreign company which is maintained by the foreign company and the ruling was that NO TDS is payable on that payments. does the same apply to web hosting?

Sumeet

Deepak

Deepak (Expert)
Follow

29 May 2008 Such royalty payments may be taxable in source country as per ADT Agreement. referene may be had to witholding tax rates.

Sumeet

Sumeet (Querist)
Follow

29 May 2008 dear sir,

i understand. TDS is not payable but withholding tax is payble on such payments.

am i right?

but tax is still payable if

a. the company does NOT have Permanent Establishment in India.

b. payment are made directly abroad.

c. what is the exemption limit on such payments?

d. services are rendered abroad

Sumeet