Tds u/s 195

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DEEPANJAN

Finance Controller

24 Points Posted on 05 September 2014

Dear Members,

Request advice on the following

An Indian Company is planning to launch a marketing campaign in Dubai
Towards this, the company will appoint a creative agency in Dubai
This agency does not have any permanent establishment in India
The advertisement campaign is restricted in Dubai and will not be in India.
The Company will pay fees to the agency for undertaking the campaign
Under local laws, the agency is not taxable in Dubai

In the above circumstances, considering provisions of IT act and DTAA, should the company deduct TDS u/s 195 from the fees payable to the agency

Replies (2)

Karthik.V.Kulkarni

Chartered Accountant

766 Points Posted on 05 September 2014

Hi Deepanjan,

There is no requirement for your company to deduct tds . As per Section 9(1)(vii) of IT Act relating to Technical service which state: "except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India" . Meaning where a fee payable to Dubai agency for earning income in Dubai is not taxable in India and hence no witholding is apllicable,

Regards

Karthik V Kulkarni