TDS on income generated Outside India

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An Indian company engaged an Indian resident firm for a project abroad and withheld tax according to foreign regulations. The payment is being made in INR from India. The question is whether Indian Income Tax TDS needs to be deducted again. The consensus is yes, TDS under section 194C should be deducted, and the Indian company can claim double taxation relief.

Sandeep Kumar Sahu

Sandeep Kumar Sahu (Querist)

18 May 2024 We an Indian Company have awarded a contract to an Indian Resident company for a project outside India. We have deducted Tax at source from the bills of the Indian company as per the extant rules of the foreign country. However, we are making the net payment against the bill in INR to the Indian resident company from India to their Indian account.

Are we liable to deduct IT TDS again from such remittance as per the rules of Income Tax of India?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

19 May 2024 No need to deduct TDS again in India

Sandeep Kumar Sahu

Sandeep Kumar Sahu (Querist)

21 May 2024 As the Income is received in India by the Indian company, it is falling under the definition of Income as per Income Tax Act and hence taxable in India. With this perspective should we deduct TDS u/s 194C at the time of payment.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

21 May 2024 Yes, deduct TDS under section 194c.
Let the Indian company claim double taxation relief.

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