TDS liability for legal services ?

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This query is : Resolved

CMA. Subhash Kumar Jha (Querist)

25 January 2011 We have hired services of a legal firm, X, in India in relation to a multi-locational case.

Now, this firm, in this connection taken legal consultancy services of their, foreign counterparts,Y, (also a lawyer firm)to proceed the case in their country (out of India against a local company).

Now, we have got debit note from X, regarding the payments made by them to Y.

What should be the position for TDS deduction at our end ?

Aditya Maheshwari

Aditya Maheshwari (Expert)

25 January 2011 TDS deductible in my view as u are making payment to X in India. So TDS deductible u/s 194J.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)

25 January 2011 You have hired a legal firm X. You have to make payment to X and tds will be deduct from this payment whether it payment regarding X's service or reimbursement of payment made by x to Y.
i.e tds will be deducted on this as a payment made to X.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)

28 January 2011 At the time of deducting TDS what you need to remember the entity to whome you are making the payment. Since you are making the payment to X you need to deduct the Tax u/s 194J as per prevailing rate.

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