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Customs duty,withholding tax

JAYANTA KUMAR BANDYOPADHYAY (professional service) (293 Points)

19 March 2021

Indian parent places 2 separate POs on USA based wholly owned subsidiary for supply material plus commissioning by foreign technician. By mistake one consolidated invoice is sent and with pending commissioning, both values are declared and customs duty paid. Actually, commissioning is sub to withholding tax..should one integrate both as without installation, is useless.what is correct route and what to do now, assuming, commissioning is pending even after 2 years from supply.

Rgds,jayanta

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2 Replies

CS M Pota (Company Secreatary) (3180 Points)
Replied 20 March 2021

From your query what I understood is that Importer has paid Customs duty on Commissioning charges as consolidated invoice for the material and commissioning and commissioning charges is subject to with holding tax and now you want the course of action correct? if yes then answer is as follow:

With holding tax is to be paid on the amount of Commission after Grossing up of the tax if net commission is to be paid .At the same time India's DTAA should be verified with USA. Further GST is also payable on the services of Commissioning.After complying all the above things you may remit Commissioning charges to the foreign technician.If your foreign technician accept burden of withholding tax then you deduct tax after verifying DTAA and remit the remaining amount after paying .But GST in both case your client will have to pay.

JAYANTA KUMAR BANDYOPADHYAY (professional service) (293 Points)
Replied 20 March 2021

Many thanks,Sir

Here importer is Indian parent

Exporter is Wholly owned subsidiary. Therefore, besides transfer pricing / arm length pricing, accounts and tax consolidation issues are involved. Kindly guide

Rgds

Jayanta

Howrah