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Tax implications on overseas expenses

vasan (Finance manager) (40 Points)

24 December 2015

I HAVE TO PAY COMMISSION AND FEW OTHER EXPENSES TO A OVERSEAS COMPANY FOR OBTAINING BUSINESS IN USA. WHAT ARE THE TAX IMPLICATIONS IF I PAY THIS FROM MY EFC A/C.WE ARE A BPO WITH US CLIENTS

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6 Replies

(Guest)

Does your company have place of business in USA? If yes, then there will be no tax implications in India. The payment shall be liable for deduction from the income from USA place and taxable in US only.

vasan (Finance manager) (40 Points)
Replied 26 December 2015

Thanks Mr.Karhikeyan.

We do not have a branch or place of business in USA in the name of the parent company. However we have a WOS doing businessin USA.

(Guest)

If it is a WOS, why is parent company paying for WOS expenditure? There will be FEMA problems if Parent company pays for WOS abroad

vasan (Finance manager) (40 Points)
Replied 28 December 2015

Good Mrng.

The Parent co, is not paying. We have to pay commission to agents in US. The same is now being held back by our clients and the balance is remitted to our EFC account. The WOS is a separate entity.

(Guest)

I dont understand. You say, "We have to pay commission ". Who is "We" here? Is it the parent company or WOS in USA. ?

vasan (Finance manager) (40 Points)
Replied 08 April 2016

Hi Karthikeyan.

Let me put it clearly.

The Indian company is having clients based out of USA. The clients make remittances through a WOS in USA p;artially and certain client make direct remittances to india. The WOS collects the receivables and makes payment to agents and certain other expenses in US and remits the balance money to our EFC account. The WOS is not doing any business but just acts as a collection agent for the parent company.

Net in the Indian company books we are having a receivables outstanding to the extent of the money retained overseas. How do i account for this money spent overseas.

Thanks