TDS on Commission paid to UK
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
19 November 2009
i have a client who wants to pay commission in UK against their export sales in UK. Is it required to deduct TDS?
If yes,then in what rates & in which manner.
If yes,then in what rates & in which manner.
19 November 2009
Please follow these steps:-
1) Call for the agreement your client has with his agent in UK.
2) Call for the shipping bill / GR.
3) Cal for proof evidencing receipt of realisation of export proceeds in Foreign Currency.
Check that the amount of commission against the shipments is declared in Shipping Bill or GR.
Check the realisation and determine the amount payable to the agent based on rate of commission.
Now your major role as a CA. Read the agreement and determine that the agent is an independent agent acting in the course of his own business outside India (in UK). The agent should declare the fact that he has No Operations or PE in India that would require him to be assessed to any taxes in India.
There should be no element of fees for technical, managerial or consultancy services or reimbursement for providing any personnel to the exporter abroad. there should be no provisions for reimbursing charges like telephone bills or travelling / conveyance or office expenses that would otherwise have to be incurred by the agent during the course of his business. If there are such reimbursements, then it can be construed that the agent is a dependent agent providing managerial services.
If there is no such fees in the agreement and it is simply that agent is arranging to bring buyer and seller together for aa commission and all negotiations are done by the Principal (exporter) and sale is on a Principal to Principal basis, then the income is not accruing or arising in India as per Section 9 of Income Tax Act provided agent has no PE or operations in India. You can then issue a Form 15CB indicating no TDS on account of income not arising / accrued / received in India.
If there is a PE or there is only Technical or Managerial fees or there is partly technical / managerial fees and partly commission, make another post not as anonymous and I will make further suggestions.
1) Call for the agreement your client has with his agent in UK.
2) Call for the shipping bill / GR.
3) Cal for proof evidencing receipt of realisation of export proceeds in Foreign Currency.
Check that the amount of commission against the shipments is declared in Shipping Bill or GR.
Check the realisation and determine the amount payable to the agent based on rate of commission.
Now your major role as a CA. Read the agreement and determine that the agent is an independent agent acting in the course of his own business outside India (in UK). The agent should declare the fact that he has No Operations or PE in India that would require him to be assessed to any taxes in India.
There should be no element of fees for technical, managerial or consultancy services or reimbursement for providing any personnel to the exporter abroad. there should be no provisions for reimbursing charges like telephone bills or travelling / conveyance or office expenses that would otherwise have to be incurred by the agent during the course of his business. If there are such reimbursements, then it can be construed that the agent is a dependent agent providing managerial services.
If there is no such fees in the agreement and it is simply that agent is arranging to bring buyer and seller together for aa commission and all negotiations are done by the Principal (exporter) and sale is on a Principal to Principal basis, then the income is not accruing or arising in India as per Section 9 of Income Tax Act provided agent has no PE or operations in India. You can then issue a Form 15CB indicating no TDS on account of income not arising / accrued / received in India.
If there is a PE or there is only Technical or Managerial fees or there is partly technical / managerial fees and partly commission, make another post not as anonymous and I will make further suggestions.
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