Tds on payment to service provider outside of india

[Asked by Guest]

Hello,

I have a service provider (IT and Marketing person) working for me outside of India (UK, US and Australia).

These service providers has no base in India or has no relation with India except that I hired them to work for my company in those countries.

Now when I have to make the payment, do I deduct any TDS? If yes, then how is this person going to claim TDS which we deduct in India because he/she has not base here in India?

And I am wondering if thats the case then what if my clients from US, UK and other foreign countries start deducting TDS in their country before sending the payment to me then how would I claim that?

Any help is much appreciated. Many Thanks

Hello, I have a service provider (IT and Marketing person) working for me outside of India (UK, US and Australia). These service providers has no base in India or has no relation with India except that I hired them to work for my company in those countries. Now when I have to make the payment, do I deduct any TDS? If yes, then how is this person going to claim TDS which we deduct in India because he/she has not base here in India? And I am wondering if thats the case then what if my clients from US, UK and other foreign countries start deducting TDS in their country before sending the payment to me then how would I claim that? Any help is much appreciated. Many Thanks.

Read more at: http://www.caclubindia.com/forum/tds-on-payment-to-service-provider-outside-of-india-348283.asp

Hello, I have a service provider (IT and Marketing person) working for me outside of India (UK, US and Australia). These service providers has no base in India or has no relation with India except that I hired them to work for my company in those countries. Now when I have to make the payment, do I deduct any TDS? If yes, then how is this person going to claim TDS which we deduct in India because he/she has not base here in India? And I am wondering if thats the case then what if my clients from US, UK and other foreign countries start deducting TDS in their country before sending the payment to me then how would I claim that? Any help is much appreciated. Many Thanks.

Read more at: http://www.caclubindia.com/forum/tds-on-payment-to-service-provider-outside-of-india-348283.asp

Hello, I have a service provider (IT and Marketing person) working for me outside of India (UK, US and Australia). These service providers has no base in India or has no relation with India except that I hired them to work for my company in those countries. Now when I have to make the payment, do I deduct any TDS? If yes, then how is this person going to claim TDS which we deduct in India because he/she has not base here in India? And I am wondering if thats the case then what if my clients from US, UK and other foreign countries start deducting TDS in their country before sending the payment to me then how would I claim that? Any help is much appreciated. Many Thanks.

Read more at: http://www.caclubindia.com/forum/tds-on-payment-to-service-provider-outside-of-india-348283.asp

Hello, I have a service provider (IT and Marketing person) working for me outside of India (UK, US and Australia). These service providers has no base in India or has no relation with India except that I hired them to work for my company in those countries. Now when I have to make the payment, do I deduct any TDS? If yes, then how is this person going to claim TDS which we deduct in India because he/she has not base here in India? And I am wondering if thats the case then what if my clients from US, UK and other foreign countries start deducting TDS in their country before sending the payment to me then how would I claim that? Any help is much appreciated. Many Thanks.

Read more at: http://www.caclubindia.com/forum/tds-on-payment-to-service-provider-outside-of-india-348283.asp

Hello, I have a service provider (IT and Marketing person) working for me outside of India (UK, US and Australia). These service providers has no base in India or has no relation with India except that I hired them to work for my company in those countries. Now when I have to make the payment, do I deduct any TDS? If yes, then how is this person going to claim TDS which we deduct in India because he/she has not base here in India? And I am wondering if thats the case then what if my clients from US, UK and other foreign countries start deducting TDS in their country before sending the payment to me then how would I claim that? Any help is much appreciated. Many Thanks.

Read more at: http://www.caclubindia.com/forum/tds-on-payment-to-service-provider-outside-of-india-348283.asp

[Ganeshan Kalyani]

TDS is deductible on the transaction. For exemption or deduction at lower rate please refer DTAA.

Thanks for your message.

Yes, under DTAA I shouldn't be deducting TDS on payment to a foreign service provider, so why do you say I should deduct?

Because as I mentioned, how is that person going to claim TDS in India when they have nothing to do in India?

[Ganeshan Kalyani]

I have not seen your case in particular as the Country with which you are transacting is not mentioned. However you have ascertained in that reference. Further for second para I would say that as per Income Tax law the income accrued in India is taxable in India.

Thanks again for your reply.

I think you missed information which I mentioned above:

1. Country I am transacting with our UK, US and Phillipines

2. Income Tax Laws are applied on residents of India who are accruing in India. In my case, receiver is not accruing income in India. Source of payment is India, but money is going out of India.

Hope this helps in understanding this case.

[Prakash Gupta]

No TDS will be applicable since the service provider has no permanent establishment in India. It will be cover by the business income article of DTAA of the respective country and accordingly will be taxable in that country only.

regards,

Pankaj Singh

[Ganeshan Kalyani]

Hope you have gone through the DTA with reference to the query under discussion. otherwise getting advise of a Chartered Accountant should be taken. The solution will be full proof. Thanks.

AI Summary

TDS on cross border services depends on DTAA allocation and permanent establishment, consult treaty for withholding relief.
Whether Indian payers must withhold tax on fees to foreign service providers depends on domestic withholding rules and the applicable DTAA: if the provider has no permanent establishment in India and the DTAA assigns taxing rights to the provider's country (business income/PE), India generally should not impose withholding beyond treaty relief; parties should consult the specific treaty and obtain professional advice or certificates for lower or nil withholding.