Tds
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
31 August 2013
Online training is being provided by a company situated in U.K to the employees of a company in India.
1.) Should TDS be deducted on the payment being made by the Indian company to UK?
2.) Is there any service tax liability in this case?
Kindly advise with applicable sections.
1.) Should TDS be deducted on the payment being made by the Indian company to UK?
2.) Is there any service tax liability in this case?
Kindly advise with applicable sections.
31 August 2013
yes tds is to be deducted and service tax is to be deposited under reverse charge mechanism scheme wait for the other's expert opinion.
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Querist : Anonymous
Querist :
Anonymous
(Querist)
31 August 2013
Kindly quote the relevant sections.
26 July 2025
Here’s a detailed answer with the **relevant provisions** on the **TDS and Service Tax applicability** for **online training services provided by a UK company to an Indian company**:
---
### ✅ 1) **TDS Applicability on Payment to UK Company**
Yes, **TDS is applicable** under the **Income Tax Act**, subject to conditions explained below.
#### ⚖ Relevant Section:
**Section 195** – *TDS on payments to non-residents*
> “Any person responsible for paying to a non-resident... any sum chargeable under the provisions of this Act... shall deduct income tax thereon at the applicable rates.”
#### 🎯 Key Consideration:
* The crucial test is whether the **payment is chargeable to tax in India** under the **Income Tax Act** and **DTAA**.
* If the **UK company has no PE (Permanent Establishment)** in India, and is simply delivering **online training (no human interface or presence in India)**, it **may not be taxable in India**, especially if it’s an automated e-learning service.
* But if there is **live training / consultancy** involved, it could be considered **“fees for technical services (FTS)”** under:
* **Section 9(1)(vii)** of the IT Act, and
* Article 13 of the **India-UK DTAA**
📌 **TDS Rate**:
* If considered FTS under DTAA: **15%** (subject to DTAA conditions and Form 10F + TRC)
* If under IT Act: Up to **10% + surcharge + cess**
👉 **Recommendation**: Apply to the Assessing Officer for a **lower / NIL withholding certificate** under **Section 195(2)** or obtain **CA certificate (Form 15CB)** to determine taxability.
---
### ✅ 2) **Service Tax Liability** under Reverse Charge (Pre-GST era)
As your query refers to a period **before GST** (since you're talking about Service Tax):
#### ⚖ Relevant Provision:
* Under **Rule 2(1)(d)(G)** of the **Service Tax Rules**, where services are provided **from outside India and received in India**, the recipient is liable to pay service tax under the **Reverse Charge Mechanism (RCM)**.
* This falls under **Import of Services** as per **Taxation of Services (Provided from Outside India and Received in India) Rules, 2006**
✅ **If the training is considered Online Information and Database Access or Retrieval (OIDAR) or consultancy** – it would be **taxable under reverse charge**.
📌 **Service Tax Rate** (as of 2016): **15%**
> In post-GST regime (after 1 July 2017), it would be covered under **IGST**, also under RCM.
---
### ✅ Summary:
| Aspect | Applicability | Section |
| ------------------------- | ---------------------------------- | --------------------------------- |
| **TDS** on payment to UK | Yes, under Sec 195 (if chargeable) | 195 / 9(1)(vii) / DTAA Article 13 |
| **Service Tax (pre-GST)** | Yes, under Reverse Charge | Rule 2(1)(d) + Import Rules |
---
Would you like help with a **draft TDS certificate**, **Form 15CA/CB**, or a **DTAA extract**?
---
### ✅ 1) **TDS Applicability on Payment to UK Company**
Yes, **TDS is applicable** under the **Income Tax Act**, subject to conditions explained below.
#### ⚖ Relevant Section:
**Section 195** – *TDS on payments to non-residents*
> “Any person responsible for paying to a non-resident... any sum chargeable under the provisions of this Act... shall deduct income tax thereon at the applicable rates.”
#### 🎯 Key Consideration:
* The crucial test is whether the **payment is chargeable to tax in India** under the **Income Tax Act** and **DTAA**.
* If the **UK company has no PE (Permanent Establishment)** in India, and is simply delivering **online training (no human interface or presence in India)**, it **may not be taxable in India**, especially if it’s an automated e-learning service.
* But if there is **live training / consultancy** involved, it could be considered **“fees for technical services (FTS)”** under:
* **Section 9(1)(vii)** of the IT Act, and
* Article 13 of the **India-UK DTAA**
📌 **TDS Rate**:
* If considered FTS under DTAA: **15%** (subject to DTAA conditions and Form 10F + TRC)
* If under IT Act: Up to **10% + surcharge + cess**
👉 **Recommendation**: Apply to the Assessing Officer for a **lower / NIL withholding certificate** under **Section 195(2)** or obtain **CA certificate (Form 15CB)** to determine taxability.
---
### ✅ 2) **Service Tax Liability** under Reverse Charge (Pre-GST era)
As your query refers to a period **before GST** (since you're talking about Service Tax):
#### ⚖ Relevant Provision:
* Under **Rule 2(1)(d)(G)** of the **Service Tax Rules**, where services are provided **from outside India and received in India**, the recipient is liable to pay service tax under the **Reverse Charge Mechanism (RCM)**.
* This falls under **Import of Services** as per **Taxation of Services (Provided from Outside India and Received in India) Rules, 2006**
✅ **If the training is considered Online Information and Database Access or Retrieval (OIDAR) or consultancy** – it would be **taxable under reverse charge**.
📌 **Service Tax Rate** (as of 2016): **15%**
> In post-GST regime (after 1 July 2017), it would be covered under **IGST**, also under RCM.
---
### ✅ Summary:
| Aspect | Applicability | Section |
| ------------------------- | ---------------------------------- | --------------------------------- |
| **TDS** on payment to UK | Yes, under Sec 195 (if chargeable) | 195 / 9(1)(vii) / DTAA Article 13 |
| **Service Tax (pre-GST)** | Yes, under Reverse Charge | Rule 2(1)(d) + Import Rules |
---
Would you like help with a **draft TDS certificate**, **Form 15CA/CB**, or a **DTAA extract**?
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