TDS for payment to non resident

Hi,

I wanted to know if TDS will be applicable for a payment of fees a to Non Resident who renders services outside India as stated below :

First issue :

A company called A Ltd based in India regularly pays fees of $50,000 for Technical/Professional services to a Professional agency outside India ( call them M Inc).M Inc. has no PE or any business connection in India and are based in say Country X who renders services to a subsidiary company of A Ltd (lets call the subsidiary B Ltd) based in say Country X.

As you can see both the M Inc. and B Ltd is based out of Country X.So very clearly in such a case where A Ltd makes payment directly to M inc.,the fees can be paid without deduction of tax as the services are rendered outside India to its subsidiary B Ltd.This is my understanding.Please correct me if Iam wrong.

Now the second issue is if say a third party (Call them as RR) makes a payment to M Inc.:

RR is a vendor of A Ltd in India and carries out services of professional nature for A Ltd in India regularly.But in a particular exceptional situation this month, A Ltd has asked RR to pay M Inc. $ 50000 for which M Inc. renders services outside India to B Ltd.The invoice is raised by M Inc. in the name of RR.There is no contract as such between M Inc and RR other than a few emails that are exchanged.

Now the issue is whether RR has to deduct TDS on the payment to M Inc. and remit the same to the Central Govt or the same need not be deducted since the services which are rendered outside India and hence the tax need not be deducted? 

Assume all other procedures are duly taken care of like Form 15CB and 15CA.

Would like to get some inputs on this from the members.

Thanks.

 

Replies (1)
Not required to deduct TDS under 195 read with 115A .since the payment is made for services rendered outside India for business carries outside India.

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