TDS U/S 195

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MAHESH C. SALGIA (Querist)
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24 April 2011 Whether TDS u/s 195 of the I. T. Act, applicable on payment of USD 1000 towards Ocean Freight Charges by a Indian CHA to a Hongkong based Company which neither has PE nor Business connection in India.

Thanks in advance.

CA. Aryendra

CA. Aryendra (Expert)
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24 April 2011 No TDS is not required to deduct

MAHESH C. SALGIA

MAHESH C. SALGIA (Querist)
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24 April 2011 Is there any reasoning for not deducting TDS

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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25 April 2011 Mr. Mahesh,

Kindly elaborate what made you make the statement "Hongkong based Company which neither has PE nor Business connection in India"

As regards Business Connection in case of Hongkong based company ,any Company located in country with which India doesn't have a DTAA stands to form a business connection.

As regards your query you have to check the provisions of sec. 44B and sec.172(both provide TDS of 7.5%) and therefore need to deduct TDS @ 7.5% of sum paid as Ocean Freight Charges.

Anuj
0-9810106211

MAHESH C. SALGIA

MAHESH C. SALGIA (Querist)
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25 April 2011 I mean the Hongkong based Comapany does not have any Office in India.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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25 April 2011 Business Connection is a very wide term and it has no relevance with the office of foreign Company in India.

Also regarding PE there are so many situations (Agency PE, Service PE etc.)under which the foreign Company can form a PE and here too it has no relevance with the office of foreign Company in India.

Anuj
0-9810106211

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