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

AI Summary

TDS on Commission Payments to Foreign Companies: Applicability and Rate under Section 195 of Income Tax Act A query was raised regarding the applicability of Tax Deducted at Source (TDS) on commission payments to a foreign company under a contract for securing orders in India. The inquirer sought clarification on whether TDS is applicable and the applicable rate, as well as any service tax implications. The response referenced Section 195 of the Income Tax Act, which mandates that any person responsible for paying a non-resident or foreign company must deduct income tax at the rates in force at the time of credit or payment, excluding income chargeable under the head 'Salaries.'