Tds LIability on Payment of Referral Fees.

This query is : Resolved

HEMAL M JHAVERI (Querist)
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03 February 2009 Dear Sir,
Please tell me is there any liability on payment in the head of referral fees in mutual fund business and in stock broking business for private limited company. If there is a liability, please tell me rate of deduction and a section.

VINAYAK D PRABHU

VINAYAK D PRABHU (Expert)
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03 February 2009 Hi,
Suppose your payments as regards referral fees are being paid to Foreign parties, the following is the answer:
In a landmark decision, the Authority for Advance Rulings has ruled that referral fees received by a foreign company, with no permanent establishment in India, from a local entity is not taxable in the country.
The ruling has come on the application moved by real estate adviser Cushman & Wakefield (S) Pte Ltd (CWS), registered and based in Singapore , seeking clarity whether the referral fee received by it from the group firm in India, Cushman & Wakefield India Pvt Ltd (CWI), is taxable in the country. Cushman & Wakefield provides services related to acquisition and sale of real estate besides advising on the sector.
“The referral commission is not taxable in India as royalty or fee for technical services or business income as the applicant (CWS) has no business connection or permanent establishment in India and therefore there is no liability on the payer to deduct (tax) at source under the Act,” the Authority For Advance Rulings (Income-Tax) ruled

HEMAL M JHAVERI

HEMAL M JHAVERI (Querist)
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04 February 2009 So, it means is it taxable in India? please reply me as our expense is big.