31 May 2012
Please advise based on following facts :
Company A is a public limited company incorporated in India. Company B, incorporated in Singapore, is its wholly owned subsidiary.
In FY 11-12, Director of Company B renders professional services to Company A, for which Company B raises an invoice to Company A.
Now, Can Company B raise an invoice in itscapacity when its director has rendered services? Also, should Company A be deducting withholding taxes in both the scenarios i.e. making payment to Company B/ Director? And, is there any way to avoid withholding of such taxes?.
31 May 2012
If the director has rendered services on behalf of company B then that company can raise invoice, however if director has rendered professionally and independently then he has to raise. In the latter case, benefit under DTAA can be received as independent personal services, however it needs to be proved independent which seems difficult in your case. (on assumption that director is NR)
Check definition of FTS in DTAA, if fits in then according TDS would be applicable.
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