TDS related qurey

Hi Karthi,

Good one..........!

I am sure but think the above sum will be taxble as "Gifts" u/s 56  (if the same exceeds RS. 50,000)

There is no  prescribed rate for TDS in case of gifts u/s 56, but in case of non-residents the residual rate is 30%

Better option will be to move an application u/s 195(2) & get a certificate from AO.

Dear Karthik

Sec.195 deals with taxability of payments made to non-residents.

TDS u/s. 195 is attracted only if the said payment to non-residents is income chargeable under the ACT.

In your case it is implied that the foreign resident guest are given living allowance take care of their basic needs of lodging, boarding, food etc during their stay in India. In my opinion it should not fall under the purview of sec 195 and hence no TDS is required to be deducted.

Dear Rachit Bro.,

Ur view might be right.........!

Pls ignore-

Intially I was also thinking on same lines but then recent judgment of Delhi HC  in case of VAN Oord ACZ where it is held that "Liability to deduct TDS u/s 195 cannot be avioded on the ground that receipt was not chargeable under Income Tax Act (especially by the deductor on its own)"

https://www.simpletaxindia.org/2010/03/tds-us-1951-if-non-resident-income.html

I would say better to go for certificate u/s 195(2)

agree with amir

Originally posted by : Amir
	Dear Rachit Bro., Ur view might be right.........! Intially I was also thinking on same lines but then recent judgment of Delhi HC  in case of VAN Oord ACZ where it is held that "Liability to deduct TDS u/s 195 cannot be avioded on the ground that receipt was not chargeable under Income Tax Act (especially by the deductor on its own)" https://www.simpletaxindia.org/2010/03/tds-us-1951-if-non-resident-income.html I would say better to go for certificate u/s 195(2)

 Dear Amir Bro,

It seems that you have mis-read the Delhi High Court judgement in the case of Van Oord Acz India (P) Ltd. This judgement on the contrary is a favourable judgement. It is relaxation from the rigours of Karnatak HC's ruling in Samsung Electronics Co. Ltd.

In this landmark ruling of Van Oord the Delhi HC has held that the obligation to deduct tax at source arises only if the no-resident's income is chargeable to tax in India. The rationale adopted by the Delhi HC was based on two facts : that the subject reimbursements did no constitute income and that the assessment of the foreign recipient has been completed without further tax liability.

I agree with your suggestion of making an application u/s 195(2) & getting a NOC certificate from AO.

But from my personal experience I find that in more than 90% cases the certificates issued are biased towards the revenue and against the assessee.

Since the issue is litigative it for the assessee to take a call on whether to be conservative or the other way round.

Yes, Rachit is correct. No need to deduct TDS, as it is a reimbursement of expenses. However proper supporting of expenses should be kept.

Dear Rachit,

Thanks Bhai........!

I wrongfully linked this judgment with the present case.....

I still think it CAN be covered under "Gifts"..........wots say?