TDS on comission paid to foreign agency

TDS 682 views 4 replies

A learner

Corporate Accounts

345 Points Joined January 2009

Dear All,

Our company is selling airline tickets to international customers through agencies located outside india. These agencies are not selling any tickets to Indian customers and cater to international needs only. They are indepedent agents who collects money from customers on their own.

We give comission/incentive to these foreign agents on selling tickets, but we dont pay them this comission . Rather, we give them credit in our books for this comission which they can use in selling tickets.

Further, we are accounting this incentive in our boks of accounts as comission and paying service tax on THIS COMISSION as well under reverse charge.

MY QUERY IS: Shall we deduct TDS on this comission. Prior to October 2009, this was certainly a tax free transaction as notified via Circular : No. 786, dated 7-2-2000, so we never deducted tax. But post the circular 7 of 2009 dated 22nd October,2009 ( which has withdrawn all earlier circulars) how shall we treat this.

FYI

That foreign agent has no branch or permanent establishment in India.

My view on the same is: since agent has no business connection in india, it should not be taxed in India.

Please suggest , how should we go about it.

Thanks to all.

Best Regards,

"A Learner"

Replies (4)

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

as the products are from india, u have to deduct TDS,

to save the situation , u will have to sell then the tickets at discounted rates and they will sell next with their commission, this will reduce the hurdle .

A learner

Corporate Accounts

345 Points Joined January 2009

Dear,

Tickets prices have to be uniform and we cant sell it at discounted rates. Further we want to show it as comission only.

I want to known the taxability of commission only as per my opinion its not taxable in india. Request you to please share basis of your view.

Thanks a lot

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

a very useful presentation for you :)

A learner

Corporate Accounts

345 Points Joined January 2009

Dear,

Many thanks for uploading this useful presentation.Its really very comprehehnsive.

I would like to draw your attention to slide no. 12 of the said presentation which takes reference of circular 23 and 685 to exempt the comission from taxes. But Sir, those all circulars were withdrawn on October 2009( as i mentioned above). So i would like to know the current status on the same.

Would be good to know your useful insights on the SAME.

Best Regards,

"A Learner"