Withholding taxes
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
07 February 2012
One of my client has following query relating to Withholding Tax.Pls advise. the case detail is as below:-
1. An Indian Company (referred as HO) has a branch office overseas say Germany.
2. The Branch office is opened for administrative support only for servicing the end customer of the HO at the overseas location i.e Germany. The branch is remunerated on Cost + markup as per the Transfer Pricing study.
3. HO has sought service from a vendor based in Germany and has to therefore make professional fee payment to the vendor.
4. HO has two options:-
a. make payment from HO in India thereby withholding tax u/s 195
b. Directly remit money from the Germany branch office, thereby having no liability to withhold tax as per Indian IT law.
Query
1. Can Branch pay to the vendor locally in Germany thereby not withholding the tax as per IT law in India?
Will the position change if the services received from the vendor are for the branch office?
Pls give reference to case laws if available to support your views.
1. An Indian Company (referred as HO) has a branch office overseas say Germany.
2. The Branch office is opened for administrative support only for servicing the end customer of the HO at the overseas location i.e Germany. The branch is remunerated on Cost + markup as per the Transfer Pricing study.
3. HO has sought service from a vendor based in Germany and has to therefore make professional fee payment to the vendor.
4. HO has two options:-
a. make payment from HO in India thereby withholding tax u/s 195
b. Directly remit money from the Germany branch office, thereby having no liability to withhold tax as per Indian IT law.
Query
1. Can Branch pay to the vendor locally in Germany thereby not withholding the tax as per IT law in India?
Will the position change if the services received from the vendor are for the branch office?
Pls give reference to case laws if available to support your views.
12 February 2012
Income deemed to accrue or arise in India -
If fee is paid to the non resident and that fee is not related with its Germany-Office. -Such Income is taxable in India.
.
If fee is paid to him for the work related with the Germany Office, it is not taxable in India.
.
Please Refer Section 9(1)(vii) and Explanation-2.
.
Income deemed to accrue or arise in India -
If fee is paid to the non resident and that fee is not related with its Germany-Office. -Such Income is taxable in India.
.
If fee is paid to him for the work related with the Germany Office, it is not taxable in India.
.
Please Refer Section 9(1)(vii) and Explanation-2.
.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- House Property Reporting in ITR
- Refund Annexure-B
- Internship/Academic shown in Salary Pay Slip of a Doctor
- TDS Claim year
- Liable to deduct tds and 44ADA
- TDS Challan Code
- Rent lease agreement
- Refund of 20%pre-deposit paid for stay application
- Nomination of Bank for refund in itr 2
- Section 56(2) of the Income tax Act 1961 , Gift to relative .
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
