Tds on indian remittance to foreign company's pe in india

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2013 XYZ Inc. Canada is a foreign Company of Canada (Non Resident) having a Permanent Establishment (P.E.) in inda, Branch office which is alos registered with ROC and is filing returns regularly.The Payee (ABC Pvt. Ltd.) is remitting fees of other services (Engineering) directly to indian Bank A/c of XYZ Inc. , Canada (which is a Non Resident) on the basis of bills sent by the India office.Bills is raised in INR & service provided in India only by Indian Resident person.

Now Questions are:
1. TDS under which Section 195 (115A) or 44DA of the Income Tax Act, 1961 or TDS u/s 194J as resident in india service provided by resident indian to resident in India & render in India only.

2. If TDS is paid under 195 (115A) or 44DA
Then, How 15CA will be filled because Foreign Currency Column is mandatory field in case of foreign remittances

Request you to please clarify? Please help in this matter...

Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2014 Waiting for Reply...

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

27 July 2025 Here's a detailed explanation regarding **TDS on remittance to a foreign company’s PE in India** in your scenario:

---

### Situation Recap:

* **XYZ Inc. Canada** is a foreign company with a **Permanent Establishment (PE) in India**.
* PE is registered in India and filing Indian tax returns.
* Indian company **ABC Pvt. Ltd.** is paying engineering service fees to XYZ Inc. but directly to the **Indian bank account of the PE** in India.
* Bills are raised in INR for services rendered in India by the PE (Indian branch).

---

### 1. **Which TDS Section Applies?**

* Since the **payment is made to the PE (a resident Indian entity for tax purposes)**, and the services are rendered in India by the PE:

* The payment is treated as a **domestic transaction**.
* Therefore, **TDS should be deducted under Section 194J** (fees for professional or technical services) applicable for residents.
* **Section 195** (TDS on payments to non-residents) or **Section 44DA** (TDS on income attributable to PE of non-resident) are **not applicable** here, because the payment is not to the foreign company directly but to its Indian PE which is resident in India.

---

### 2. **Regarding Form 15CA / 15CB:**

* Form 15CA/15CB is required for **foreign remittances**.
* Since the payment is made to the **Indian bank account of the PE** in India (i.e., **no foreign remittance**), **Form 15CA/15CB is NOT required** in this case.
* The payment is treated as domestic INR payment.

---

### Summary:

| Question | Answer |
| ------------------------------- | ---------------------------------------- |
| Which section for TDS? | Section 194J (resident service provider) |
| Is Section 195/44DA applicable? | No, because payment is to Indian PE |
| Is Form 15CA/15CB required? | No, as no foreign remittance is involved |

---

### Additional Notes:

* Make sure the invoices are raised by the Indian PE and payment is made to their Indian bank account.
* The Indian PE files returns in India and discharges its tax liability here.
* If payment was made directly to the foreign company’s foreign account, then Section 195 and 15CA/15CB would be applicable.

---

If you want, I can help draft a note or a mail explaining this to your client or auditors. Would that be helpful?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now