TaxTMI 
TaxTMI 
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)
TDS on reimbursement cost to Foreign Holding company
28 Apr 2025 
5 Replies 
5095 Views Asked by
TDS on reimbursements: ensure invoice allocation and documentation or withhold under Section 195 to mitigate withholding risk.
TDS applicability hinges on whether the payment is a pure reimbursement: if original invoices are in the Indian entity's name, no markup is charged, usage is attributable to the Indian subsidiary, and a clear inter-company agreement exists, TDS may not apply. However, where the AWS invoice is in the foreign holding company's name, usage is shared across jurisdictions, or documentation is insufficient, the reimbursement is likely to be treated as payment for services (potentially royalty or fees for technical services) attracting withholding under Section 195; therefore, withholding TDS and maintaining thorough supporting records or obtaining a CA certificate or a lower/NIL order is recommended. (AI Summary)
TDS applicability hinges on whether the payment is a pure reimbursement: if original invoices are in the Indian entity's name, no markup is charged, usage is attributable to the Indian subsidiary, and a clear inter-company agreement exists, TDS may not apply. However, where the AWS invoice is in the foreign holding company's name, usage is shared across jurisdictions, or documentation is insufficient, the reimbursement is likely to be treated as payment for services (potentially royalty or fees for technical services) attracting withholding under Section 195; therefore, withholding TDS and maintaining thorough supporting records or obtaining a CA certificate or a lower/NIL order is recommended. (AI Summary)