ITDS on payment for services availed and renderd outside India by Foreign Company

[Rasesh Amin]

Dear Mr. Anuj Gupta, Thank you for your prompt reply to our querry. Payment is being made to agencies in USA and Canada. Fair is being held in Chicago, USA. You have rightly understood, we are incurring cost toward space rent, stall making charges, services towards labour & handling of exhibits as per the organisers contracted terms. We are also of the firm view that no TDS is deductible for payment towards above purposes, however our bank is insisting for suitable certificate from CA for non applicability of TDS. Can you provide us relevant ruling / sections under which TDS is not deductible on payment towards above.

AI Summary

TDS Not Applicable on Payments to Foreign Agencies Without Indian Business Connection Under Sections 4, 5, 6, 9 A query was raised regarding the applicability of Tax Deducted at Source (TDS) on payments made to foreign agencies in the USA and Canada for services related to a fair in Chicago. The bank required a certificate from a Chartered Accountant (CA) to confirm non-applicability of TDS. The response explained that under sections 4, 5, 6, and 9 of the Income Tax Act, if the foreign entity has no business connection or Permanent Establishment (PE) in India, the income is not taxable. The India-USA Double Taxation Avoidance Agreement (DTAA) supports this, and relevant case law includes R.D. Aggarwala & Co.