Pradeep (Internal Audit Manager) (24 Points)
06 August 2011Hi all
We are registered Garment manufacturing company, Which Exports Ready made garments.
we are receiving orders from foreign agency for which we pay Commission.
they do not have any branch in India,Is there ant necessory to deduct TDS
If so, how and section applicable. Please Advise
Regards
Pradeep Garg
valji
(Accounts manager-MBA)
(2150 Points)
Replied 06 August 2011
agree with above sec 195 applicable
Sidhardh
(Sr. Manager - Accounts)
(178 Points)
Replied 06 August 2011
Agree wit U S Sharma. Sec 195 Applicable.
CA R K SINGH
(CA CS FINAL CMA INTER)
(372 Points)
Replied 06 August 2011
I think the income received by the foriegn agency is not accrued/arised/deemed to accrue or arised in India/ as you mentioned that the agnecy has no branch in India. So the Income is not taxable in India. Please refer section 9.
For attracting taxing statute, there has to be some activity through permanent establishment and, if income arises without any activity of permanent establishment, even under DTAA, taxation liability in respect of overseas services would not arise in India.
case laws CIT v. Hyundai Heavy Industries Co. Ltd. [2007] 161 Taxman 191/291 ITR 482 (SC).
So i think in your case no tax is required to be deducted
deepak
(student)
(27 Points)
Replied 07 August 2011
yes tds is deducted because income arrised/accrued in india
so please deduct the tds
@*CS Siddharth Bumb. *
(B.Com, CA Final, CS )
(5270 Points)
Replied 07 August 2011
agree with all....section 195 applies...
TRILOCHAN
(SENIOR ACCOUNTANT)
(698 Points)
Replied 07 August 2011
Dear All
In case of payment made to foreign agent ( No Branches In India) Commission, Section 195 NOT APPLICABLE , so TDS Not Applicable.
Regards:
TRILOCHAN
ASIF
(BUSINEES)
(22 Points)
Replied 08 August 2011
No need to deduct TDS on Foreign commission if he doesnt have office in India.
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7014 Points)
Replied 08 August 2011
If the foreign Agent does only order procurement and does not indulge in market survey or other allied activities then there is no requirement to deduct TDS for the commission payment outside India.
Anuj
+91-9810106211
femaquery @ gmail.com
AZIZ SHAMSUDHIN
(propreitor)
(32 Points)
Replied 09 August 2011
BALAJI N V
(Partner)
(28 Points)
Replied 09 August 2011
A foreign agent operates in his own country and receives his income outside India and hence such an agent is not liable to be taxed in India (Refer Toshoku Ltd 125 ITR 525 SC). Though circular number 786 is withdrawn, this decision which held that the foreign agent's commission is not taxable in India is relevant. Accordingly there would be no need to deduct tax at source.
PRITESHKUMAR S MANIYAR
(NONE)
(24 Points)
Replied 09 August 2011
Pls refer section 195 and DTA as well. You ll have to examine on country to country basis by checking DTA with respective counbtry. Also provisions of DTA will prevail over provisions of Income Tax Act to the extent they are benificial to the assesee.
PRITESHKUMAR S MANIYAR
(NONE)
(24 Points)
Replied 09 August 2011
Pls refer section 195 and DTA as well. You ll have to examine on country to country basis by checking DTA with respective counbtry. Also provisions of DTA will prevail over provisions of Income Tax Act to the extent they are benificial to the assesee.
CAclubindia
