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 roaming remittances depends on taxability, treaty relief and permanent establishment status. TDS applicability on foreign remittances for roaming charges depends on whether the payments are taxable in India, their correct legal characterisation, and whether treaty provisions or a permanent establishment affect taxing rights and withholding obligations. Domestic decisions finding that interconnection charges were not subject to withholding do not automatically control cross border remittances; a fact specific assessment of characterization, recipient residency, treaty relief and the applicable withholding rate is required.