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Applicability of TDS on advertisement (foreign)

sudheer (Accountant) (72 Points)

11 October 2011

We have given advertisement in UAE - Gulf News, now we are making the payment in USD, whether we have to pay Service Tax & TDS.

Kindly inform

Regards

Sudheer

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6 Replies

Jayesh (Internal Auditor) (214 Points)
Replied 11 October 2011

Dear Sudheer,

Yes, you have to pay both Service Tax as well as TDS(u/s 195). These is because, in case of import of service, service receiver is liable to pay service tax(u/s 66 of service tax).

1 Like

Mihir (Wealth Manager) (5293 Points)
Replied 11 October 2011

Check their bill. I don't think there is any TDS deduction on this unless the advertisement is related to sports.

1 Like

sudheer (Accountant) (72 Points)
Replied 11 October 2011

Originally posted by : Mihir
	Check their bill. I don't think there is any TDS deduction on this unless the advertisement is related to sports.

Thank "U" for your reply,

It is not related to sports., it is an advertisement for our business purposes.

Swapnil Jain (Finance - FP&A) (564 Points)
Replied 11 October 2011

reason for my answer:

Under section 195 of the Income-Tax Act, 1961 any person responsible for paying a non-resident any sum chargeable under Indian tax law shall deduct income-tax thereon at the rates in force at the time of credit of such sum to the account of the payee or at the time of actual payment thereof, whichever is earlier.

Thus TDS is required to be deducted only if the income of the advertisement provider is chargeable under India tax law. This further depends upon if the income of the advertisement provider is received in India or accrued in India or deemed to be received or accrued in India (section 9). If payment is made outside India, then it is not received in India. If the advertisement provider provides the services outside India, then the income is not accrued in India.

The advertisement company's income does not fall under the provisions of section 9,

a. if the payment is made outside India,

b. the advertisement company does not have (or is not available)any fixed base/PE in India, and

c. the advertisement company does not provide any services in India.

So no income tax is required to be deducted if the income of the advertisement provider does fall under the ambit of deeming provisions of section 9 of the IT Act.

This is my view!! wait for some experts to comment on same

2 Like

CA. Anubhav Jaggi (CA) (104 Points)
Replied 12 October 2011

Originally posted by : Swapnil Jain

TDS on Advertisement Income of UAE entity is to be made only if, UAE entity has a permanent establihment (PE) in India. Please obtain a declaration/confirmation from them as to whether or not they have a PE in India.

reason for my answer:

Under section 195 of the Income-Tax Act, 1961 any person responsible for paying a non-resident any sum chargeable under Indian tax law shall deduct income-tax thereon at the rates in force at the time of credit of such sum to the account of the payee or at the time of actual payment thereof, whichever is earlier.

Thus TDS is required to be deducted only if the income of the advertisement provider is chargeable under India tax law. This further depends upon if the income of the advertisement provider is received in India or accrued in India or deemed to be received or accrued in India (section 9). If payment is made outside India, then it is not received in India. If the advertisement provider provides the services outside India, then the income is not accrued in India.

The advertisement company's income does not fall under the provisions of section 9,
a. if the payment is made outside India,
b. the advertisement company does not have (or is not available)any fixed base/PE in India, and
c. the advertisement company does not provide any services in India.

So no income tax is required to be deducted if the income of the advertisement provider does fall under the ambit of deeming provisions of section 9 of the IT Act.
This is my view!! wait for some experts to comment on same

Completely Agreed.

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7014 Points)
Replied 17 October 2011

I would just like to add to Swapnil's answer that the said payment may be covered under sec 9(1)(i) if the foreign agency has some agent in India or other business generating activity in India . However there is DTAA and if there is no PE in India (agency or otherwise) then such income is not taxable in India.

Anuj

+91-9810106211

femaquery @ gmail.com

2 Like