Tds on airfreight payment to overseas agent

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Vishwanatha Nayak (Querist)
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14 March 2015 We are a freight forwarder in India & we have to make one payment to our overseas agent in USA towards airfreight charges.Is TDS is applicable for this payment if yes at what rate TDS should be deducted

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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14 March 2015 This being payment to non resident for services rendered out side India no TDS applicable.

Payment by a resident to an agent of a non resident
This settled branch of law appears to have been overruled by the withdrawal of CBDT Circular No 23 of 1969. However one may take the help of the decisions in the Morgan Stanley case as well as the Ishikawajima Harima case 2007 158 Taxman 259 SC and come to a conclusion that the settled law in this regard remains the same. However the withdrawal of the above circular 23 of 1969 (which was binding on the department) will certainly foment disputes due to the I T Department taking a stand that all the payments would be subject to withholding unless an application under section section 195(2) is made.

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