Tds as per sec 195

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Ritu mathur (Querist)
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04 October 2012 What is the TDS provision in case of reimbursement of expenses ?

What is the TDS liability on the payment of consultancy in case the receipient is a non resident, not liable to pay tax in INDIA, Not having a permanent establishment in INDIA?

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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04 October 2012 If it is purely reimbursement of expenses incurred by non resident on behalf of payer then no tds will be deducted u/s 195 irrespective of PE in india or not.
The amount of reimbursement should be well supported by the evidence.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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05 December 2012 The answer for reimbursement cases is very simple.

If the Indian Company was to pay the sum directly then whether any TDS would have been there?????

If yes, then it shall apply for reimbursement cases also.

Anuj
femaquery@gmail.com

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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06 December 2012 Dear Anujji,

There are plenty of cases to explain the reason as why TDS is not required to be deducted.
1. HNS India VSAT Inc. Vs. Dy. CIT(2005)95 ITD 157-Delhi Tribunal
Wherein it was held that section 195 says that any sum which is chargeable to tax in india is liable for tds, for the simple reason that amount was paid on account of reimbursements of actual expense which are well supported could not be treated as income chargeable to tax in india.

2. Bangalore International Airport Ltd. v. ITO (2008) 24 SOT 26(Bang.)
3.Expeditors International India P. Ltd. v. CIT (2008) 118 TTJ(Delhi)652.

In both the above cases, it was held that in case of reimbursement there is no income element in the hands of non resident and section 195 can not be made applicable

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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09 December 2012 There are lot of cases where it has been held that TDS ought to be deducted on reimbursements,provided the income being paid to non-resident is chargeable to Income tax in India.

I have given a very simple and clear rule for identifying the cases where TDS is to be deducted for reimbursement of expenses.

Anuj
femaquery@gmail.com

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