A joint venture was formed between an Indian Company and a foreign MNC for taking up a road contract in India. The Indian company had agreed to pay a fixed percentage as commission to the foriegn company, if the work is awarded to the JV.
1)Will this come under the purview of service tax?
2) What are the procedures to be followed to transfer the amount to the foreign company?
3) Should TDS be deducted from the transaction? if yes, how can the foreign company claim this?
What are the terms of JV agreement and what is the function performed by MNC?
MNC is jst a facilitator for meeting the contract conditions. The whole work will be financed and done by the Indian member
My understanding is the MNC is acting as technical consultants, hence place of provision will in taxable territory.
For TDS you need to check whether PE is there, actual services performed, Double taxation avoidance agreement etc.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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