Applicability of TDS

[Pankaj Vora]

Indian partnership firm(X) for conducting education course/training for Indian customer company(C) gets services of foreign company from UK(F). For paying to foreign company(F) in UK (in GBP) does Indian Partnership Firm(C) have to deduct TDS on such amount. As Indian Customer Company (C) already deducts Tax (TDS) while paying to Indian Partnership Firm along with Service tax amount.

[Guest]

There is no connection between the foreign company and the indian customer whom services provided by the indian partnership company, so that there is no effect of payment made by the indian customer to the indian partnership firm and by the indian partnership firm to the foreign company by deducting TDS

[Guest]

The transactions between Indian Partnership Firm with Indian customer company and Indian partnership firm with UK (F) are separate. Thus, irrespective of the fact that TDS is deducted by Indian customer company already deducting TDS while paying to Indian Partnership firm, when payment is made by Indian Partnership Firm to UK (F), TDS would be applicable u/s 195 subject to DTAA regulations.

AI Summary

Withholding tax on payments to foreign service providers remains payable by the payer, subject to treaty relief. The payment by the Indian customer to the partnership is distinct from the partnership's payment to the foreign supplier; the partnership's obligation to withhold tax arises on its payment to the non resident supplier under section 195 principles, subject to relief under the applicable double taxation avoidance agreement.