TDS -FORIGN COMPANIES
This query is : Resolved
11 November 2008
We Received the proffessional Sevices from Singapore pertains to architectural work.
weather TDS for Professional Service is Applicable ?
weather TDS for Professional Service is Applicable ?
Ram Avtar Singh
(Expert)
11 November 2008
Payments to foreign companies by call centers taxable in India
By siliconindia news bureau
Tuesday, September 9, 2008Comment(4)PrintForward
New Delhi: India's taxation scope is reaching out to encompass foreign companies providing services to the domestic call centers from their overseas offices. The Income Tax Appellate Tribunal (ITAT) has made it clear that the foreign companies who provide connectivity and technical services to the domestic call centers from their overseas offices will be taxed in India.
The tribunal said, "The transaction clearly falls under the definition of 'royalty,' and royalty payment to NRI is deemed to accrue and arises in India and therefore payment is subject to tax deducted at source". As it was clarified t hat it is a responsibility of every firm availing such services to deduct TDS despite the location of the firm's equipments.
The decision was triggered by two cases filed by Hyderabad-based Frontline Software and Call World Technology. The services were taken from IGTL Solutions and True Dial Technologies to generate and also cater to the outbound PSTN calls within the U.S. through the equipments of the foreign companies. In these cases, the Indian based firms did not deduct any TDS while making the payments as the entire activity took place in U.S. But the court gave out its verdict in favor of the Commissioner of Income Tax (appeals). They considered that the payments made to the U.S. firms, is nothing but royalty. As per the decision the domestic call centers have to make the payments deducting the liable income tax of the foreign companies at the source.
according to that if foreign compay has any Registerd Branch/ Office in india TDs to be deducted.
By siliconindia news bureau
Tuesday, September 9, 2008Comment(4)PrintForward
New Delhi: India's taxation scope is reaching out to encompass foreign companies providing services to the domestic call centers from their overseas offices. The Income Tax Appellate Tribunal (ITAT) has made it clear that the foreign companies who provide connectivity and technical services to the domestic call centers from their overseas offices will be taxed in India.
The tribunal said, "The transaction clearly falls under the definition of 'royalty,' and royalty payment to NRI is deemed to accrue and arises in India and therefore payment is subject to tax deducted at source". As it was clarified t hat it is a responsibility of every firm availing such services to deduct TDS despite the location of the firm's equipments.
The decision was triggered by two cases filed by Hyderabad-based Frontline Software and Call World Technology. The services were taken from IGTL Solutions and True Dial Technologies to generate and also cater to the outbound PSTN calls within the U.S. through the equipments of the foreign companies. In these cases, the Indian based firms did not deduct any TDS while making the payments as the entire activity took place in U.S. But the court gave out its verdict in favor of the Commissioner of Income Tax (appeals). They considered that the payments made to the U.S. firms, is nothing but royalty. As per the decision the domestic call centers have to make the payments deducting the liable income tax of the foreign companies at the source.
according to that if foreign compay has any Registerd Branch/ Office in india TDs to be deducted.
11 November 2008
the Two Entities are different and its purely on contract basis as per the work order they performed the services
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