TDS on reimbursement cost to Foreign Holding company

[Sai Prasad]

Should we deduct TDS for reimbursement of AWS Cost incurred by the holding company on behalf of the Indian subsidiary?

It is cross charged to Subsidiary on Cost tocost basis (without any Mark-up)

AI Summary

Cloud Service Cost Reimbursement Triggers Complex Tax Withholding Scenario for Multinational Entities Under Cross-Charging Arrangements A discussion forum explored tax deduction (TDS) implications for cloud service (AWS) reimbursement between a foreign holding company and its Indian subsidiary. The key issue centered on whether TDS is required when expenses are cross-charged without markup. The analysis suggested potential TDS liability due to invoice complexities, combined client usage, and lack of clear cost segregation. Recommended actions include maintaining detailed documentation, potentially withholding TDS, and ensuring future invoices clearly attribute costs to specific entities.