TDS is deductible on reimbursements of expenses made to non-residents? - Professionals - Taxation - TIK Share
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TDS is deductible on reimbursements of expenses made to non-residents?


Rahul Rai

2014-03-11

I have a case to discuss. One of the client deals in foreing countries and have incurred some expenses.

The expenses were paid by non-residents. Client is reimbursing the non-residents.

Do client need to deduct tax on payments payable to non-residents?

Vedanta Deshika

2014-03-11

TDS is deductible u/s 115A on royalty, technical fees, interest and other incomes on Gross basis i.e it would cover reimbursement of expenses as well. However, a Permanent Establishment (PE) in India of a Non Resident would be liable to TDS on a net basis i.e. Excluding the expenses incurred and reimbursed which is governed by Sec 44DA

TDS Rate would be 25% u/s 115A

For Interest income, we may have to apply 194LD , 194LC @ 5%. 

Kindly revert for further queries

 

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Rahul Rai

2014-03-11

Is the TDS deductible on the money paid to foreign transporter for transporting the goods from foreign port to Indian port?

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Vedanta Deshika

2014-03-11

@ Rahul Rai. The payment of transportation charges are not covered u/s 115A. Hence it would not be liable to TDS

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