Tds applicable or not

TDS 608 views 2 replies

CA Keyur Sheth

As an Audit Exceutive

53 Points Joined August 2010

Dear Sir / Madam,

I have a doubt regarding TDS is applicable on commission or not on following transaction.

Our Client has export the goods in China for exhibition purpose. In Exhibition, our client has sold some goods on behalf of the company in china. The company in china wants commission on that sales.

We have given commission to the china company. Should we have deducted TDS on the amount of commission which had been paid by us? And also give me the appropriate case law regarding the above mentioned transaction.

Please give me answer that TDS is applicable or not and applicable then in which section and how it is applicable?

Thanks in advance.

Replies (2)

CA Sripal Jain

Associate Finance

709 Points Joined January 2009

AS per section 9 and relevant provisions of section 5 ,any income deemed to accrue or arise in india is taxable

1. as per your facts the china company is selling goods in china and the commission is being paid outside india

2. there is no business connection also as per your facts,coz china company is not carrying any operations in india

3. there is no question of section 195 as there is no nexus at all...

it is purely a business recipt for china..for tht business connection must be dere which is clearly absent in your case

therefore no need to deduct TDS

regards

sripal jain

CA Sripal Jain

Associate Finance

709 Points Joined January 2009

unfortunately there is no case alw regrding this but relevant circulars were issued bt tht is also being withdrawn...bt im very sure this transation is not taxable..so lets wait for others opinion