Dear All,
We have imported coal from a foreign supplier. The discharging of cargo took more time than originally agreed and accordingly, we are required to compensate the supplier, ie. we need to pay demurrage.
The query is, whether the payment of demurrage would attract TDS. Would be grateful, if some judgment can be quoted.
Thank You.
Warm regards,
Shyam
Demurrage Payments to Foreign Suppliers Not Subject to TDS Under Indian Income Tax Law, Clarifies Circular A query was raised regarding whether demurrage payments to a foreign supplier for delayed cargo discharge are subject to Tax Deducted at Source (TDS) under Indian Income Tax law. An initial response incorrectly stated that demurrage is subject to TDS, but this was retracted. A subsequent reply clarified that there is no provision in Indian Income Tax law for charging TDS on demurrage payments related to imports. A reference to a circular was provided, suggesting shipping charges are not liable to TDS. The discussion concluded with an acknowledgment of the clarification provided. (AI Summary)
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