Tds on sales commission to the foreign agent
This query is : Resolved
30 January 2016
We have exported goods to south korea. Now we need pay Sales commission to Korean agent ( Not an Indian) in $ USD . He korean resident. Please guide if this case TDS applicable or not.
Regards
Regards
CA R SEETHARAMAN
(Expert)
30 January 2016
As the sales commission is not taxable in India TDS not applicable.
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30 January 2016
THANKS FOR IMMEDIATE REPLY.PLEASE GIVE MORE DETAILS SUCH AS RULES, NOTIFICATION,DTAA, ETC...
30 January 2016
TDS is not to be deducted on commission give to foreign agent, only if the agent has no business connection in India.
The agent was not authorised to market the product of any third party and it did not have any business connection in India and their services was also not utilised in India.The tribunal noted that in the case of Ardeshi B. Cursetjee & Sons Ltd, it was held that the commission paid to non resident agent outside India was not chargeable to tax in India. Irrespective of the Circular issued by the CBDT, the question of taxability of such a commission had to be decided as per the provision of section 9(1) of the Act. As per the provisions of the Act commission paid by the assessee to the non resident agent was not chargeable to tax in India. Further, even after the withdrawal of Circular No.23 of 1969, the position had remained the same, i.e. the commission paid to non-resident agents was not liable to tax under the provisions of the Act when the services was rendered outside India, payments were made outside India and there was no permanent establishment or business' connection in India. Accordingly, the disallowance made by the AO was deleted.
Source: Gujarat Reclaim & Rubber Products Ltd. V. ACIT , ITA No.8868/Mum/2010
The agent was not authorised to market the product of any third party and it did not have any business connection in India and their services was also not utilised in India.The tribunal noted that in the case of Ardeshi B. Cursetjee & Sons Ltd, it was held that the commission paid to non resident agent outside India was not chargeable to tax in India. Irrespective of the Circular issued by the CBDT, the question of taxability of such a commission had to be decided as per the provision of section 9(1) of the Act. As per the provisions of the Act commission paid by the assessee to the non resident agent was not chargeable to tax in India. Further, even after the withdrawal of Circular No.23 of 1969, the position had remained the same, i.e. the commission paid to non-resident agents was not liable to tax under the provisions of the Act when the services was rendered outside India, payments were made outside India and there was no permanent establishment or business' connection in India. Accordingly, the disallowance made by the AO was deleted.
Source: Gujarat Reclaim & Rubber Products Ltd. V. ACIT , ITA No.8868/Mum/2010
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