Query on tds for contractors for software company

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Mary Parmar

Managing Invoices

21 Points Posted on 30 November 2015

Hi,

We are a software firm based in Ahmedabad. Our 100% invoicing/jobs are from US clients. No work/clients in India.

Our accountant suggests that since we do not work for Indian clients, we are exempted from Service Tax. Is it correct?

And also they suggested a way to save taxes, is to transfer the payments in someone else's accounts and just deduct/pay 1% TDS.

They have given us many accounts in which we transfer by check Rs 100,000 every month in each account and they charge 5% for "such service", and in return they give us 95,000 back by cash. That is, just showing bank entries to show expenditures.

Is this a good option or legal to do so?

Thanks,
Mary

Replies (4)

annamalai

Partner

52 Points Posted on 01 December 2015

Hai

The suggeston is correct , you can still negotiate on the fees.

for further lesser charges you can mail admin @ annamalaiassociate.com

Annamalai.k

9751325000

Karthik.V.Kulkarni

Chartered Accountant

766 Points Posted on 01 December 2015

Hi Mary, i think so you have been grossly misguided. If you are paying to US ppl for services received then you are liable to deduct tds @ 15% not on rate applicable to contractors. If you are receiving money then you are not liable for tds and neither are the usa clients. I dont think so diverting income to other accounts will get rid of your tds liablity. Kindly take informed call as your accountants are, as per my opinion mis guding you for their fees. Pls approach for a second opinion from professional practicing CA s as i don't think the idea given by your accountants is anywhere legal, logical or sensible.