Applicability of TDS and percentage

[d.v. gupta]

dear sir, we CHA making payment for freight to the non resident companies having no office in india. the non resident co. paid freight for our client and raise bill to us. we recovered the bill amount from client in india and make te freight payment incurred on our behalf to non resident co..kindly advise whether we should deduct tax at source. if yes, at what percentage?

[Guest]

In your case, assuming that the freight is for GTA and service is being provided partly in India, you have to ensure that you are working as a pure agent. In case of pure agent, the liability of payment of service tax on your client in India. Therefore, ask your client to discharge service tax on import of service of GTA. This more so that the services being partly or wholly provided in India.

AI Summary

Clarification on TDS applicability for payments to non-resident companies for freight services without an office in India. A user inquired about the applicability of Tax Deducted at Source (TDS) on payments made to non-resident companies for freight services, where the non-resident company has no office in India. The non-resident company bills the user, who then recovers the amount from their client in India. The response advised that if the user acts as a pure agent, the responsibility for service tax lies with the client in India, especially since the service is provided partly or wholly in India. The client should discharge the service tax on the import of services.