Dear Experts, I have one query
A Pvt Ltd, an Indian company has to pay royalty to B a foreign company to the extent of Rs.10 core. Now B company directed the A pvt ltd to pay this royalty amount of Rs.10 crore to C Pvt Ltd (Supplier of B company in India). C Pvt ltd will adjust entire amount towards export realisation to be received from B company.
Now my questions are:
1. Whether A Pvt Ltd can pay directly to C Pvt Ltd?
2. If so, whether GST has to be paid and TDS has to be deducted?
3. Whether tri-party agreement required to do so?
4. Is there any problem for C Pvt Ltd to get this amount from A Pvt Ltd? Since export proceeds going to be received in India Rupee.
Kindly clarify experts.
Indian Company to Pay Rs. 10 Crore Royalty Directly to Supplier; GST, TDS, and Tri-Party Agreement Considered An Indian company, A Pvt Ltd, must pay a royalty of Rs. 10 crore to a foreign company, B, which has instructed A to pay the amount to C Pvt Ltd, B's supplier in India. The queries are whether A can pay C directly, the applicability of GST and TDS, the necessity of a tri-party agreement, and any issues for C receiving the amount in Indian Rupees. The response clarifies that direct payment is possible, IGST may not be required if already paid, TDS on GST depends on taxability, a tri-party agreement may be needed, and transactions should occur through a VOSTRO account. The authorized bank must verify the transaction's authenticity. (AI Summary)
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