Tax Professional and in Service
1795 Points
Joined June 2009
1. yes indian co. would be necessary to deduct the TDS otherwise whole amount paid as expenses would get disallowed even if the same is in foreign currecy payment.
2. Income which accrued or arise or received in india is liable for indian incometax for all assessees including foreign company. Thus services rendered in india by foreign company through their engineers would be termed as income deemed to accrue or arise in india and hence foreign co, would liable to file ITR and showing such income therein. But the Foreign co. would not be liable to declare all its world income in ITR. Only those income which accrues or arises or received in india, would become taxable in india. Thus only that income would be shown in ITR which is liable to tax in india.
3. Foreign company can able to take the credit of such tax paid under relevant DTAA even if the TDS so deducted is more than what is liable to be deducted. Since the indian co. deducted the TDS and paid it to the indian government treasury, foreign co. would not be able to recover such excess portion from indian co. but it should able to take credit of all taxes paid (incl. of such excess) in its Return.
Hope this solves all ur queries.
Regards,
Manoj
CAclubindia
