Dear Sir/Madam,
We are a web hosting company located in India. We lease servers from Outside India. We are billed in Euros and Dollars by the foreign server provider(Located in Netherlands, Germany, Russia and USA). The server provider is not registered in India. We are billed on monthly and annual subscripttions by our server provider.
My Questions Are
1) Lets consider, we register company in USA, declare that company in Income Tax Returns of India. And ask our server provider to bill the company registered under USA. .Can we make payment towards the server providers from that USA Entity bank account? As we will start collecting payments from foreign customers to the bank account,opened under registered company in USA.
2) If Yes for above question, should we deduct any TDS according to India Income Tax Law? Or should we follow US Laws ?
3) If No for 1st question, what is the way we can make the payments towards our Server Providers ?
4) In case opening company in USA does not workout, are we liable to pay TDS for the payment made to our server providers outside india(country mention above). ?
5) If we are making payment to our server provider via online - debit/credit card of company`s current bank account, presently we are not paying any TDS. Is it right what we are doing?
6) In case we are liable to pay TDS, As the server provider is outside India and not registered in India, What is the TDS percentage we need to deduct? while paying the total invoice generated by server provider.
In case there is certain percentage to be deducted before making the payment, our server provider will deny regarding deduction, as they expect us to pay full 100% of the invoice generated. What is the best solution in in this case ?
If there is no solution for this, we will be under loss and bound to close the company. As paying TDS to Income Tax Dept. and also full invoice payment to server provider.
CAclubindia
