Deduction of TDS on overseas payments against freight debit notes

[ABF GROUP OF COMPANIES INDIA]

Hi.

As a Freight forwarder, we use to get Debit Notes from Freight forwarders around the world who are our network agents. These debitnotes are in foreign currency mostly in USD and sometimes in Euro & GBP. These are for the Freight charges paid by the Agents on our behalf and some handling charges for the services provided by the agents for us.

 My question is:

Are the remmittances made to these agents around the world for the debit-notes raised by them ( some times Credit note given by us) is subject to deduction of TDS. If yes then under what section and what is the rate of deduction.

Is there any judgement on opinion given by expert panel on this subject.

please advice.

[Bakul Gandhi]

If the services are rendered outside India, and the network agents are all independent, their charges will not be taxable in India and therefore no need of withholding tax u/s 195. The banker-authorised delaer will remit foreign currency on your behalf only if your application is with a certificate from CA that the payment is not liable to any withholding tax.

[KURIACHAN PAULOSE]

If the freight charges are on account of goods shipped at any port in India it is hit by Section 44B . However, benefit under respective country's DTAA can be availed.

CA.Kuriachan V P, Chennai

AI Summary

Withholding tax on overseas freight payments: place of service and agent independence determine withholding obligation. Whether remittances for overseas freight debit notes require withholding depends on the place of service and whether agents are independent; services rendered outside India by independent agents are not taxable in India and do not attract withholding, though bankers may request a CA certificate. Payments relating to carriage from Indian ports may fall under the freight income taxation regime and treaty relief should be considered.