Implication of TDS

[Guest]

As a service receiver ( for import of services in India) we have to pay service tax on $ 100 to be paid to a management consultant in UK. Whether TDS ( under Income Tax)is to be deducted on $100 or at $112.36 ??

[Guest]

As per Sec.66A of Finance Act and Sec.2(1)(d)(iv)r.w. Import of service, rules, the person receiving the service in India would be liable to pay service tax when a service of the nature explained in the query is received. As per IT provisions, the TDS is attracted u/s 195 on any payment made (or credited) to a Non-resident/foreign company. In this case, the liability to pay tax would fall on the service receiver and hence it cannot said to be the payment made to the non-resident/foreign company. Hence, No TDS, if any applicable is deductible only on $ 100 and not on service tax component applicable.

[Surender Gupta]

I fully agree with the opinion of Mr. Ramanujam V and TDS should be deducted only on $ 100.

[Guest]

I ALSO AGGREED WITH MR RAMANUJAM V AND TDS SHOULD BE DEDUCTED ON 100 $ AND NOT ON 112.36 $

AI Summary

TDS should apply only to $100, not $112.36, when paying UK consultant for services imported to India. A query was raised about whether Tax Deducted at Source (TDS) should be applied to $100 or $112.36 when paying a UK management consultant for services imported to India. The consensus among respondents was that, according to relevant tax provisions, TDS should be deducted only on the $100 payment and not on the additional service tax component. This is because the liability to pay service tax falls on the service receiver in India, and thus, the TDS is applicable solely on the principal amount paid to the non-resident entity.