Tds applicability for payment in foreign remittance

[SUDHIR SINGHI]

Please guide that payment (remittence in foreign currency) by an indian telecom company to a foreign telecom company for roaming charges of its customers against usage in there network outside india is liable to TDS or not and if yes then at what rate.

[Rama Krishana]

For domestic purpose, department tried to collect TDS. But, ITAT and HC has decided against the revenue and said that no TDS is liable to be deducted u/s 194J on interconnection charges. However, regarding foreign remittance, the situation may be different since it is an income which is taxable. Therefore there are various aspect to be seen before suggesting the applicability of TDS on such remittance like whether this amount taxable in India or not, what are the TDS rates, what is the correct category etc.

[Anuj Gupta]

The answer for your query is NO. The said payment becomes payment for business purposes and in absence of PE(I have pre-supposed)nothing shall be taxable.Also as answered earlier ITAT and HC have decided against the revenue and said that no TDS is liable to be deducted u/s 194J on interconnection charges.

AI Summary

TDS Applicability on Foreign Remittances for Roaming Charges Debated; Section 194J and PE Considerations Highlighted An Indian telecom company inquired about the applicability of Tax Deducted at Source (TDS) on foreign remittances for roaming charges paid to a foreign telecom company. One respondent noted that while domestic interconnection charges are not subject to TDS as per ITAT and High Court rulings, foreign remittances might be different due to potential taxability in India, requiring further analysis. Another respondent argued that such payments are for business purposes and, without a Permanent Establishment (PE) in India, are not taxable, aligning with previous rulings that no TDS is required under section 194J for interconnection charges.