Tds deduction on commission paid to us subsidiary.

This query is : Resolved

Jino J (Querist)
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26 November 2013 Hello friends,
Please see the facts of the case mentioned below:

-Indian company is the holding company dealing in software business and has a foreign subsidiary in US incorporated in US. 100% shares of the US comapany is held by the Indian company.

-The two directors of the US subsidiary are also directors in the Indian company.

-Indian company has customers in US.
The foreign subsidiary collects proceeds from US customers on behalf of the Indian company and remit that to India.

-Indian company pays commission to foreign subsidiary for this collection service @ 2.5% of amount collected.

Queries

1)Should TDS be deducted by the Indian company on the commission paid to foreign subsidiary u/s 195?
2)Does a business connection exist for the foreign subsidiary in India?

Jino J

Jino J (Querist)
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28 November 2013 Experts, can you please give your opinions..its urgent