Applicability of TDS in case of payment of fees display of a newsletter available to all the users of the website.

[MAHESH MATHUR]

The issue is that should TDS be deducted for a payment to a foreigner having no PE (permnanent establishmnent in India) for the display of a newsletter on a website.

The problem is that the of the newsletter hosting agency and its servers are outside India. However, the users of the newsletter are scattered all over the world. 

A question arises whether to deduct TDS on making payment to the Non-resident since some users of the newsletter are located in India.

[DEV KUMAR KOTHARI]

The newsletter hosting agency and its servers are outside India. The task of web hosting is performed out side India.

Therefore, the establishment to render service is out side India, services are actually  rendered out side India (there is not even telephone link provided by website to Indian party).

Indian party get links through its ISP and not from website.

Therefore, the website should not be liable to pay Income tax in India because the property  is not located in India, and service is not provided in India though it is availed in India and all parts of world connected with internet.

In my view it is a case where  TDS is not required because there is no taxable income in India.

AI Summary

No TDS on Payments to Foreign Entity for Hosting Services Rendered Outside India, No Taxable Income in India. A query was raised regarding the applicability of Tax Deducted at Source (TDS) on payments made to a foreign entity for hosting a newsletter on a website, with users including those in India. The foreign entity has no permanent establishment in India, and its servers are located outside India. The response clarified that since the hosting services are rendered outside India and there is no direct service link to India, the payments to the foreign entity should not attract TDS, as there is no taxable income generated within India.