Liability to deduct TDS by a foreign (non resident) company

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MANIAN and RAO (Querist)

25 July 2008 A foreign company incorporated in UAE has no operations in India and has no income or assessment in India. It entered into an agreement with an Indian company to train its personnel in India by the Indian company, for a period of 3 months. For the services, it pays charges to the Indian company. Whether the foreign company is liable to deduct tax at source on such payment to the Indian company? (payment nature is one covered u/s 194C). If so, whether it has to obtain PAN / TAN and file TDS return? If not deducting TDS, what are the consequences? Whether, and if so to what extent, the Indian company as its agent would be liable for such default of the foreign company?

CA CS CIMA Prakash Somani

CA CS CIMA Prakash Somani (Expert)

28 July 2008 No foreign company is not liable to deduct TDS. So no question arise to obtain PAN/TAN and file TDS return by foreign company.

But Indian company may have to pay Tax.

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