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Tds & service tax query

CA Sahil Singla.. (Service Tax ) (3746 Points)

02 December 2015

Dear Sir

My client is a Pvt Ltd company. It makes online payment to compnaies located outside India for purchase of Domains & servers. Plz let me know following:

1. Whether any service Tax to be paid by my client on reverse charge basis ?

2. Whether any TDS to be deducted ? if yes, at what rate ? As, there is no provision for deduction of TDS while making online payment, whether my client has to deposit TDS from its pocket ?

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3 Replies

MAHESH (Tax Consultant) (114 Points)
Replied 02 December 2015

Service Tax is applicable on reverse charge basis.

TDS has to be deducted as per section 195. while making payment you have retain tds component and balance to be transferred.

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 02 December 2015

If service is in the nature of online database retrival service then POPS would be outside india and not chargeable to service tax. Otherwise its an import of service and service tax has to be paid on reverse charge basis. As far as TDS goes TDS should be retained and then transferred. Tds rates should be considered as per sec 9 rw relevant dtaa.

P. Somani (Student) (56 Points)
Replied 02 December 2015

1yes Reverse charge will be applicable.

2 for tds prospective 3 rules for income accrued in india

1 Receipt rule 2 resident rule 3 accrued rule

if any of rules is applicable then tds is deducted u/s 194J. if co. who provides services is DTAA OR NOTwith india is also considerable for tax rebate prospective