TDS on foreign Payment

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This query is : Resolved

Sanjive (Querist)

01 March 2011 Dear all,
Kindly help me in clarify the below issue.

An assessee has engaged in the business of technical consultancy who did outsource a job out of India and the this job was done for a client out side India. The client has made the payment to my assessee and now my assesee want to make payment to doer of that job who is based out of India. My assessee has played as an intermediator and both the service giver and service receiver are based out of India they both dont have any permanent establishment in India.

But one of the client company's one person has directorship in the assessee's concern.

Please clarify the issue in this matter that whether assessee is liable to deduct TDS on the payment made to service giver in other country.

Thanks in advance.

srikanth

srikanth (Expert)

02 March 2011 206AA requires tds to be deducted on such payments.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)

02 March 2011 206AA provides that in case of PAN not provided by deductee then the deductor shall deduct TDS @ 20%.

Ideally you should deduct TDS @10.5575% or 20% (as the case may be)in the present case.

Also the transfer pricing provisions shall also be needed to looked into.

Sanjive

Sanjive (Querist)

04 March 2011 Thanks Anuj..

Would appreciate if you could please further clarify the reasons why should Assessee deduct the taxes on this payment.

Can't I approach AO to issue certificate u/s 195 for non deduction of TDS on the said payment. If yes, on what basis.

Thanks

CA. Anuj Gupta

CA. Anuj Gupta (Expert)

04 March 2011 Sanjive,
Yes you can always approach ITO u/s 195 but that it is time consuming process and sometimes costly too.

Also kindly give the reasons why the payment should not be subject to tax in India.

If you can want you can discuss the case in details with me

Anuj
9810106211
anuj@arsacas.com

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