Company 'A' receives certain Services from Company 'B' , that is incorporated outside India . Also Company 'A' is also rendering certain different type of Services to Company 'B'. While Withholding the TDS , whether the Company 'A' in its Books should net off the amount payable and net receivable and then deposit the TDS OR the TDS needs to be deposited on amount payable by Company 'A' to Company 'B' , without netting off.
What are the Income Tax Provisions in this regard.
Company A must withhold TDS on services from Company B without netting; consider FEMA for netting decisions. Company A receives services from Company B, which is based outside India, and also provides different services to Company B. The query is whether Company A should net off the amount payable and receivable when withholding Tax Deducted at Source (TDS) or deposit TDS on the payable amount without netting. The response clarifies that payments receivable by Company A from Company B are not subject to withholding tax. Company A must withhold tax on services received from Company B if applicable. The decision to net off amounts should be considered from the Foreign Exchange Management Act (FEMA) perspective and may be reflected as net per accounting principles. (AI Summary)
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