TDS on commission to a foreign company

[Shiva S]

Dear Expert, 

 

We have an contract with a foreign company for getting orders with some companies in India. we have to pay the differnce amount of PO value and actual cost (as agreed by both of us) to the foreign company. kindly clarify whether TDS attract in this case and if yes, what is the percentage.  Also the service tax implication in the transaction

 

Thanks

[Vivek Harsh]

^{Sec 195}

[(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest ²[***] or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries" ³[***]) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :

AI Summary

Withholding tax on cross-border commission payments: payer must deduct tax when crediting or paying income under Section 195.
Payments to a foreign company for commission are subject to withholding: the payer must deduct tax at the time of credit to the payee or at payment, whichever is earlier, and withhold at the rates in force; the payer must treat the remittance as income chargeable under the Act for this purpose.