Regrding TDS liability on payment to foreign companies

[rajeevjain]

One of my client has started business if tour and travel. He makes payment to foreign companies for booking of Hotel Accommodation on behalf of his clients. He asks me to provide certificate u/s 15CB. Those foreign companies have no permanent establishment in India. Is there any TDS liability on my client ? Please advise me the correct position of law.


CA. Rajeev Jain

[camanojgupta]

If the F Co has no PE in INdia then no income can be taxed in INdia. Consequently no TDS requirement under section 195
CA MANOJ GUPTA
JODHPUR
09828510543

[rajeevjain]

Thanks for the reply but how can I come to know whether foreign company has a PE in India or not.

[ashutosh majumdar]

One of my client has started business if tour and travel. He makes payment to foreign companies for booking of Hotel Accommodation on behalf of his clients. He asks me to provide certificate u/s 15CB. Those foreign companies have no permanent establishment in India. Is there any TDS liability on my client ? Please advise me the correct position of law.


CA. Rajeev Jain

camanojgupta is right in principle but I would request for more information:

(i) In which country is the recipient situate? Is there a AADT with the Govt of that Country?

(ii) Does the AADT provide for the taxation of "management" or "consultancy" services like s. 9(1)(vii)?

(iii) Are the recipients the hotels or agents acting for them?

(iv) Is there an agreement with the recipient? Does the agreement provide for the rendering of any "management" or "consultancy" services by the recipient? What are the other relevant terms of the agreement?

(v) Does the recipient have any office or tie-up with parties in India? Does he have transactions with other parties like your client? What have the other parties done at the time of remittance?

On the Q of a PE, you should obtain a sworn statement or affidavit from the recipient that he has no PE in India.

[camanojgupta]

If u can do nothing then simply make a search on Internet if the F Co is showing any establishment in India

[mnandgaonkar]

The order of the ITAT in case of  Star Cruises (India) Travel Services P.Ltd reported in 134 TTJ 204/ 39 SOT 18 or 46 DTR 284 will be of help to you to analyse your issues.