TDS is deductible on reimbursements of expenses made to non-residents?
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?
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
Is the TDS deductible on the money paid to foreign transporter for transporting the goods from foreign port to Indian port?
@ Rahul Rai. The payment of transportation charges are not covered u/s 115A. Hence it would not be liable to TDS