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Liabilities of tds

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vishal singla

vishal singla (Querist)
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10 October 2013 whether tds is to be deducted,when commission paid to foreign agent commission for procurement order

Nikhil Kaushik

Nikhil Kaushik (Expert)
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10 October 2013 Dear Vishal,

Earlier, the position on applicability of TDS provisions on commission paid to foreign commission was very clear. However, in past few years, in various cases it has been held that TDS is deductible on such payments. Refer to AAR judgment in the case of in the case of SKF Boilers and Driers Pvt. Ltd., In re [2012] 206 Taxman 19/18 taxmann.com 325 (AAR-New Delhi), thus opening up the possibility of
income tax department penalizing you for non-deduction of taxes.

However, as on date, the judgment of the Hon'ble Supreme Court in the case of Toshoku Ltd. (supra)is still the law of the land as regards the applicability of TDS provisions to foreign agents' commission paid by Indian exporters, wherein it was held that, "The commission amounts which were earned by the non-resident assessee for services rendered outside India cannot, therefore, be deemed to be incomes which have either accrued or arisen in India..."

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