Witholding tax for import of services from US and/or China

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Sumit Agrawal (Querist)
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13 November 2021 I providing management consultancy services mainly to international clients through my LLP firm (or sometimes as a freelancer/independent consultant). Now, in order to provide my services, I often take support i.e. import "services" from companies (or sometimes independent contractors) based in the US and China.

My questions:

1) Do I need to deduct withholding tax for payments to entities in USA and China that does not have an establishment in India? If yes, at what rate?
2) Do I need to deduct withholding tax for payments to independent contractors in China (or any other country, say Indonesia, Philippines)? If yes, at what rate?

Appreciate your input!

Thanks,
Sumit

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 November 2021 1 and 2 Witholding tax not applicable as it will not fall under fees for technical service.

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Sumit Agrawal

Sumit Agrawal (Querist)
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16 November 2021 This is helpful to know .. though of the CAs has advised that my services will fall under technical services it is mandatory to deduct withholding tax @15% for payment to US-based vendors and 10% for China-based vendors. However the vendors both in the US and China do not agree to such a deduction.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 November 2021 Managerial service will fall under technical service hence witholding tax applicable as advised by other CA.
You bear the deduction if they are not agreeing.

Sumit Agrawal

Sumit Agrawal (Querist)
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17 April 2022 The services taken from the foreign entities involve recruitment/identification of relevant persons who can be located anywhere in the world and scheduling phone interviews/discussions in between those candidates and me to discuss a project topic for 30-60 minutes. We need this discussion as part of primary research to gather info in order to deliver our research/consulting projects. I'm dealing with two USA entities both of who say they deal with multiple clients in India who do not need to deduct any tax and that they will not be able to use any such deduction as their input credit when they file their return at the end of the year.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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17 April 2022 This will not fall under fees for technical service no need for deduction of witholding tax.

Sumit Agrawal

Sumit Agrawal (Querist)
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18 April 2022 That's helpful to know. In that case: is there a need to ask for the service provider's TRC? Also, it seems there is no need to submit 15CB to the bank and only 15CA will suffice? Since banks typically ask for 15CB, I'm wondering if there's anything that they would need to understand that 15CB is not required anymore.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 April 2022 Obtain TRC. Bank may ask for 15CB provide it as they don't know it's taxable or not.

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