Tds on commission paid to overseas parties

[pardeep bisht]

commissons payments to overseas parties if they are not having any office in india attracts TDS. Please confirm. For making such payments what formalities are to be done.

[JainPal Jain]

No TDS needs to be deducted on commission paid to foreign agents because the income does not accrue to the agent in India so as to make it taxable it in India. There are two board circulat to this effect and SC decision also.

[pardeep bisht]

Sir, Thanxs for reply. can you please confirm for Board circulars and SC decssion on the same. We want to see the complete details of the same

[Rama Krishana]

You may read the section 9(1)(i) - explanation 1(b) which is run as, "(b) in the case of a non-resident, no income shall be deemed to accrue or arise in India to him through or from operations which are confined to the purchase of goods in India for the purpose of export ;" Therefore, the view of Mr. Jain was correct. Basic provision of Income Tax Act, 1961 clears the situation itself.

AI Summary

Clarification on TDS: No deduction needed for overseas commissions if income doesn't accrue in India per Section 9(1)(i). A query was raised regarding whether Tax Deducted at Source (TDS) applies to commissions paid to overseas parties without an office in India. One respondent clarified that TDS is not required as the income does not accrue in India, supported by board circulars and a Supreme Court decision. Another participant requested details on these references. A third contributor cited Section 9(1)(i) of the Income Tax Act, 1961, affirming that income from operations confined to purchasing goods in India for export does not accrue in India, supporting the initial response.