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withholding tax on reimbursement of expenses

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G Muralidharan

G Muralidharan (Querist)

12 December 2009 Whether withholding tax under Sec195 for Reimbursement of expenses on cost to cost basis would apply.

Barun Kumar Ghosh

Barun Kumar Ghosh (Expert)

12 December 2009 Section 195 casts a responsibilty on the payer to deduct tax at source from any payment of interest or other sum (other than salary ), which is chargeable to tax under the income-tax Act. If the income is chageable to tax in India, then only the person making payment to non-resident is liable to deduct tax at source under section 195.Reimbursement of expenses to a non-resident on cost to cost basis does not have any element of income. Therefore, there is no requirement to deduct tax at source.

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