The history of the transaction is-
1. Indian company has given service to US.
2. So the liability and expenses is booked by US company.
3. Now US company wants to make payment, but some technical problem they cannot make the payment.
4. US company approach to Indian company (subsidiary of US company) for making payment on behalf of US company.
5. Indian company will take reimbursement from US company.
Query-
IS THERE ANY TDS IMPLICATION ON THE SAID TRANSACTION? IS INDIAN COMPANY IS LIABLE TO DEDUCT TDS?
There is no expenses booking in the books of Indian Company.
The proposed journal entry in the books of Indian Subsidiary is-
1- Indian Party (Service provider) Dr. XXXXX
To Bank
2- Company U.S. Dr. XXXXXX
To Indian Party (Service provider)
3- Bank Dr. XXXXXX
To Company U.S.
Kindly suggest the better way.
Hope this would not be gray area.
CAclubindia
