TDS

TDS / TCS 699 views 3 replies

If any person who is not a citizen of india provide service of marketing of goods (professional service) outside india. can we deduct TDS on that professional service.

vinod

Replies (3)

No.

no we cannot

an income is indian income when it accures or arises in india

hence not taxable

Marketing service comes under technical services and is taxable u/s 195 @ 20% or rate in the DTAA in force with the beneficiary country, whichever more beneficial to the assessee.

FYI Technical services included managerial and secretarial services in the Income Tax Act as well as most of the DTAAs.

However, as per circular 786 of year 2000, board has clarified that if the foreigner is earning from you over riding commission for referring customer during regular course of his business abroad as a General commission agent / broker, and you remit to him money abroad, then no TDS is required to be done under section 195. However, the agent should be independent and not a dependent agent as is evident from your transaction. A dependent agent is the one who has authority to contract on your behalf and bind you in the purchase / sale contract with the buyer.

Therefore please visit your CA as he has to issue certificate to your bank certifiying the amount of deduction or no deduction as applicable when you have to remit from India. If you pay an independent agent commission that is not liable for TDS, you must mention the amount in your GR or Shipping Bill at time of shipment and you must have an agreement as such. If agreement indicates that you are paying him for services and not just commission, please deduct tax u/s 195 and pay.


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