TDS u/s195 read with 40(a)(1)

This query is : Resolved

G Muralidharan (Querist)
Follow

19 November 2008 It is a case of multinational company with global presence.

Please enlighten on the following issues with regard to disallowance u/s40(a)(1) read with sec 195.

1) Actual reimbursement of insurance charges (settled on cost to cost basis).Debit note raised by parent company on Indian company. Exact amount what was charged by Insurance company was passed on to Indian company, however the amount was settled to Insurance company by its parent company. In this reimbursement no profit element is embedded therein.Now the Indian co has to reimburse the amount to Parent co, will it attract 40(a)(1)because of nondeduction of TDS U/s195.
2) Is there any supportive case laws.

Ravikumar.G

Ravikumar.G (Expert)
Follow

19 November 2008 First of all it is FEMA / RBI violation. Foreign company cannot directly pay to Insurance company. It should be paid thro' banking channel to Indian co., and then it should be paid to insurance co.

G Muralidharan

G Muralidharan (Querist)
Follow

19 November 2008 Indian company does not make payment directly to Insurance company at a foreign country. Instead its parent company (which is outside India) makes payment to Insurance company. After making payment to Insurance company, the parent company raises debit note to its Indian company towards reimbursement of Insurance charges. Now in this context, under Incometax Act, whether reimbursement of expenses would get disallowed for non deduction of tax at source.

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

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

Venkateshwaran Ekambaram

Krishna Kumar A

v.rama krishna

NICKOONJ VANANI

madhuseshu yathirajam

Subscribe Now

TDS u/s195 read with 40(a)(1)

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Manager- Finance and Compliance

Accountant

CA Final

GST CONSULTANT

Senior Executive

GST CONSULTANCY