Withholding tax
Querist : Anonymous
whether tds is applicable u/s 195 on web hosting charges/cloud data paid to Non resident
Thanks
Querist : Anonymous
But there is any change after amendment in finance act 2012
Before Finance Act 2012, if the service was rendered outside India (i.e., the server and service location outside India), no TDS under section 195 was applicable because the income is considered not to accrue or arise in India.
After Finance Act 2012, the law clarified that any income deemed to accrue or arise in India is taxable, and TDS applies if the payment is taxable.
So, for web hosting/cloud data charges:
If the service is effectively performed outside India, and the beneficial user is also outside India, then no TDS under section 195 is applicable because the income does not arise in India.
However, if the service is used or enjoyed in India (even if the service is rendered outside India), then it may be considered as income accruing/arising in India and thus attract TDS under section 195.
Important points:
Cloud/web hosting usually is used in India, so the payment might be taxable in India, attracting TDS.
The exact applicability depends on facts: place of service, location of user, nature of services.
Also, the DTAA provisions may provide relief or specify withholding tax rates.
Conclusion:
Post-2012 amendment, TDS may apply if the service is used/benefited in India.
It’s best to check the service agreement, nature of services, and seek professional advice.
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