Section 195

[CA Rachit Agarwal]

Company 'A' is a resident assessess. 'A' export some material to other country. Material is subject to analysis by a non resident of the country to which it exports. Company 'A' makes the payment for analysis charges to non-resident.

1. Whether the company is liable to deduct TDS on the analysis charges paid to non resident for the analysis carried out in the overseas country under section 195?

2. Whether the analysis income is chargeable to income tax in India?

[CAGOPALJI AGRAWAL]

In my view, the services would fall under fee for technical services and covered u/s 195. When the income is taxable, only then the withholding tax comes into play.

[CA Rachit Agarwal]

I want to know whether the same is chargeable under Income Tax Act.

[Surender Gupta]

As we know that to decide the taxability of a transaction would need many aspects to be looked into. What is analysis charges? How it is performed? Where it is performed? Therefore, in my view, given the facts and details in query, it is not possible to decide the same as final conclusion. An expert analysis is required for this.

AI Summary

Withholding tax liability may arise on payments for technical services to non residents when the income is taxable in India. Whether payments by a resident company to a non-resident for overseas analytical services attract withholding under the domestic withholding provision and whether such analysis income is taxable in India. One view treats the payment as fee for technical services subject to withholding when income is taxable; another respondent states taxability depends on facts such as nature and place of performance and cannot be concluded without further analysis.