TDS u/s.195 - Query


https://incometaxindia.gov.in/circulars/2000/Cir786.asp

With reference to the above site, circular no:786 payment to Non-resident is NOT liable to TDS u/s. 195.  I argued my colleague.

As an Internal Audit Assistant, i'd like to remove my doubt before making observations.

we are a software pvt ltd. in india & we are paying monthly server rental charges and web hosting charges to the US company. They Server space providers like VSNL in India. In that server we are storing data and contents and delivery the web pages from that server. Service provider in US they don't have establishment in india.

Let me know I have to deduct TDS or not? IF yes, it is U/s 195?

FYI: we are paying server charges in USD $ currency from india to US through EEFC a/c.

But my colleague argued me that TDS is APPLICABLE to it.

Experts' opinion pl.

Replies (6)
Section 195 is not applicable in your case and therefore the circular is also not applicable. On the other hand i can say that you are liable to deduct tax subject to DTAA with US.
Mr Maheshwari is right please refer to DTAA with US and TDS is not applicable
I am uploading USA DTAA. Kindly check the artilces.
in my veiw, i think tds is not deducted u/s 195 in that particular case
Hi, Can you send me Indo-US DTAA on my personal email ID mehulddedhia2002 @ yahoo.com

dear sir,

1. why is TDS under section 195 not applicable to foriegn payments made to the company in USA?.

Web Hosting does come under royalty payments as you are paying for the computer, network and software they are providing.

2. Under DTAA, if the company based in USA has no Permanent Establishment in India, do we still have to pay withholding tax or  tds or any other tax ?

 

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