Are foreign payments covered under TDS ?

TDS 1389 views 3 replies

Shanthi

Junior Student

229 Points Joined January 2009

Dear Everyone,

When a private limited company buys web hosting from a company in USA like for example

https://billing.hivelocity.net/order/orderwiz.php?v=10&submit_domain=skip&aid=&c_code=&submit_package=package&type3_package=&type3_package=325&submit=next+%3E%3E

IT costs about US$399 per month equivalent to about say Rs 20000 per month

Now the mode of payment is only through credit card and only through online.

and NO company in USA hosting business is willing to allow for deduction in payment for TDS before paying them i.e

The price you see on the website https://billing.hivelocity.net/order/orderwiz.php?v=10&submit_domain=skip&aid=&c_code=&submit_package=package&type3_package=&type3_package=325&submit=next+%3E%3E US$399 per month is what is expected to be paid by everyone . There are no exceptions to it

My questions

1) Can the director use his OWN credit card (since no bank in India issues credit cards on company's name) to buy hosting for the company's sake since credit card is the ONLY MODE of payment for this kind of payments and no other payments are accepted by the hosting company and the private limted company CANNOT operate without good hosting from a USA company. SO if the director uses his own credit card what are the steps that need to be taken ?

2) TDS. All hosting companies in USA refuse to accept TDS deductions and so we have to pay the FULL amount to them. In this scenario..payment to foreign hosting companies is this payment covered under TDS if so ? what needs to be done ? This payment will happen on a monthly basis.

Shanthi

Replies (3)

M K MODY

BOOKKEEPING

75 Points Joined October 2008

This is a recurring expenditure. You have two options. First one, you have to communicate with your hosting firm in USA. Ask them to resolve your problem either by reducing their fees by amount to the extent of TDS, or break their schedule of payment in to first and second half of the month. Secondly, you have to bear the amount of TDS applicable as an additional expenditure. Do not raise any TDS certificate. TDS certificate requires PAN of the hosting firm. Write off TDS amount as an expenditure.

Shanthi

Junior Student

229 Points Joined January 2009

Thanks Mody Sir,

So even if a foreign company DOES not have an indian subsidiary TDS is applicable ? correct ?

The very concept of TDS is for deducting tax at source and reimbursing the same to the goverment isnt sir?

SO taking your second option the money will lie idle with indian govt since the govt cannot repatriate the TDS amount to USA since PAN of hosting firm in USA is not known?

Regarding the first option it is an impossibility since these hosting firms are very big in USA and they do not agree for TDS deductions ?

Shanthi