TaxTMI 
TaxTMI 
Tds on reimbursement
X X X X Extracts X X X X
X X X X Extracts X X X X
....ds on reimbursement<br> Query (Issue) Started By: - Gopalarathnam Muralidharan Dated:- 31-1-2010 Last Reply Date:- 1-5-2010 Income Tax<br>Got 3 Replies<br>Income Tax<br>This question relates to Sec40(a)(1a) read with Section 195. Holding company situated outside India, takes a global insurance policy for all its subsidiaries. The cost of premium paid is apportioned to its various subsidiaries on t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he basis of the turnover of the respective subsidiaries. Reimbursements are absolutely on cost to cost basis and no element of profit is embedded in the transaction. Whether this transaction would fall within the purview of Section 195 and consequent disallowance for non deduction of TDS Reply By Surender Gupta: The Reply: The provisions of section 195 regarding TDS / withholding tax are applicab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le only if such sum is taxable in India under the provisions of Income Tax Act, 1961. Therefore, it is the nature of payment by the subsidiaries in India to Holding company outside India would determine the next course of action. I think you may find it difficult to claim such payment as reimbursement of expenses as AO my ask that what what is reimbursement into this transaction. Holding company t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ook the insurance policy to secure its own interest. To what extent the subsidiary company in interest into the insurance policy taken by the holding company? Therefore, if it is considered as reimbursement of expenses which is not taxable in India, there is tds or withholding tax such payment. Reply By Gopalarathnam Muralidharan: The Reply: Thanks for your reply. The benefit derived by the subsi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....diary on the payment of global insurance policy, subsidiary in India is insured for third party risk and other business risks. Global insurance premia is paid for securing an economy in the large premia paid. Hence subsidiary definitely derives a risk coverage and the reimbursement is on cost to cost basis. Under these circumstances, no element of profit is embedded in the transaction, hence not l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iable for TDS. Can u please confirm my stand Reply By Anuj Gupta: The Reply: In my personal view if the foreign insurance company doesnot have any PE in India then the sum so reimbursed shall not be taxable in India and hence no TDS requirement shall be there.<br> Discussion Forum - Knowledge Sharing ....