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TDS on foreign payments for service rendered outside India

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Ankit Sehrawat

21 Points Posted on 12 February 2024

tds on foreign payment for service rendered outside India?

Replies (3)

Quick Summary

This discussion explores the complexities of Tax Deducted at Source (TDS) on payments made to non-residents for services performed outside India. It highlights that the applicability of TDS depends on factors like the payment's nature, the recipient's status, and where the service was rendered. While Section 195 of the Income Tax Act is relevant, the presence of Double Taxation Avoidance Agreements (DTAAs) and the specific circumstances, such as salary payments, can influence whether TDS is mandatory.

Shree Ji Steel Corporation

staff

32 Points Posted on 12 February 2024

Tax Deducted at Source (TDS) on foreign payments for services rendered outside India is a complex area governed by the provisions of the Income Tax Act, 1961, and the various Double Taxation Avoidance Agreements (DTAAs) that India has with other countries. The applicability of TDS on such payments depends on several factors including the nature of the payment, the status of the recipient, and the location where the services are rendered.

CA Rashmi Gandhi

Chartered Accountant

44442 Points Posted on 12 February 2024

Wheen any payment is made to a non resident section 195 comes into play and one has to consider if the payment is chargeable to tax in India or not.

section 5(2) will not make it deem to arise or accrue in India. Further If the country has DTAA with India , in all the agreements Salary is taxable only in the country where the assessee is employed.

In my opinion TDs need not be deducted . You are require to give form 15CB/CA

Saravanan nagaraj

332 Points Posted on 13 February 2024

I read a case study on TDS not collect while making payments to outside india. AO took it for scrutiny but assessee file writ at appellate tribunal.

In that case study, it stated that there is no liability who makes payment to deduct TDS foreigners(individuals). It means except NRI & foreign company.

Sec 195 rules apply only against on employee recruit by the company and deploy the employee outside india for work and NRI and foreign company.

DTTA concepts will not apply for foreigners.

I will give you the link.