Remittence of foreign currency through credit card
This query is : Resolved
14 May 2014
Whether payment of Telephone and internet charges paid to foreign companies for use in India through credit is allowed and if TDS/ withholding tax is applicable?
CA Mohit Bansal
(Expert)
14 May 2014
Recently, the Bangalore Bench of the Income
tax Appellate Tribunal (the Tribunal) in the case of Clear water Technology Services (P) Ltd
(the taxpayer) held that the payments to a foreign telecom
company for voice charges are in form of service
charges, and
since
the services are not of managerial,
technical or consultancy nature it cannot be tax as‘Fees for Technical Services’ (FTS). S
ince the taxpayer had no obligation to deduct tax at source from payments made to such
foreign company, the amount cannot be disallowed under Section 40(a)(i) of the Income tax Act, 1961 (the Act)
tax Appellate Tribunal (the Tribunal) in the case of Clear water Technology Services (P) Ltd
(the taxpayer) held that the payments to a foreign telecom
company for voice charges are in form of service
charges, and
since
the services are not of managerial,
technical or consultancy nature it cannot be tax as‘Fees for Technical Services’ (FTS). S
ince the taxpayer had no obligation to deduct tax at source from payments made to such
foreign company, the amount cannot be disallowed under Section 40(a)(i) of the Income tax Act, 1961 (the Act)
Nikhil Kaushik
(Expert)
14 May 2014
Mohit, does this also cover internet charges, which are not in form of voice charges.
CA Mohit Bansal
(Expert)
28 May 2014
Yes Nikhil. It does cover voice charges paid to telecom companies
Nikhil Kaushik
(Expert)
28 May 2014
Mohit,
I asked whether it covers charges not in form of voice charges as the querist is paying internet charges too.
I asked whether it covers charges not in form of voice charges as the querist is paying internet charges too.
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