Tds on advertisment

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2012 If we are making payment for adverting service for outside India.

In this case tds is applicable or not?

@VaibhavJ

@VaibhavJ (Expert)
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22 October 2012 Yes Its is mandatory..

In this case you will be making payment on behalf of your vendor.

Rgds//Vabs
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Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2012 Sir, We are not making payment for behalf of our vendor. we just making payment for our services provided outside india.

Hemant Kumar

Hemant Kumar (Expert)
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22 October 2012 Under section 195 of the Income-Tax Act, 1961 any person responsible for paying a non-resident any sum chargeable under Indian tax law shall deduct income-tax thereon at the rates in force at the time of credit of such sum to the account of the payee or at the time of actual payment thereof, whichever is earlier.

Thus TDS is required to be deducted only if the income of the advertisement provider is chargeable under India tax law. This further depends upon if the income of the advertisement provider is received in India or accrued in India or deemed to be received or accrued in India (section 9). If payment is made outside India, then it is not received in India. If the advertisement provider provides the services outside India, then the income is not accrued in India.

The advertisement company's income does not fall under the provisions of section 9,
a. if the payment is made outside India,
b. the advertisement company does not have (or is not available)any fixed base in India, and
c. the advertisement company does not provide any services in India.

So no income tax is required to be deducted if the income of the advertisement provider does fall under the ambit of deeming provisions of section 9 of the IT Act.

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Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2012 Thanks sir.