Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: form 3cd :: Central Excise rule to resale the machines to a new company :: VAT Audit :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: cpt :: VAT RATES :: due date for vat payment :: empanelment
 
 
« News Headlines »
 A tax saver scheme with higher returns
 GST registration mandatory for TDS entities
 Govt rules out extension for filing GSTR-3B returns after December
 Tax department’s e-filing portal out of action for 2 hours
 Use ITR-2 to show salary and capital gains income
  TDS Applicability On Government Contracts Under Gst (Under Section 51 Of The Cgst Act, 2017)
  How to file ITR for FY 2016-17 and all the links you need
 All about E-way Bill under GST
 Good and simple tax: on the GST regime
 Seeks to extend the time limit for filing of GSTR-1, GSTR-2 and GSTR-3
 Good news, find Tax Return Preparers soon at a place near you; 5 things to know

HC rules against TDS on all fees
March, 29th 2010

An Indian company making a payment to an overseas entity is obliged to deduct tax only if the income of the foreign firm is liable to tax in India.

This was the sum and substance of a recent Delhi High Court ruling which provides substantial relief to several companies making regular cross-border payments. Interestingly, the Delhi High Court ruling differs from a Karnataka High Court judgement in the case of Samsung Electronics last October, in which the HC held that tax has to be deducted in India from all payments made to overseas entities.

The latest ruling centred around costs reimbursed by the Indian subsidiary of the Netherlands-based Van Oord ACZ Marine Contractors. The income-tax department directed Van Oord ACZ India to withhold the tax before paying its parent company.

However, the amount withheld was refunded to the Dutch company after it filed an application with the Indian I-T authorities. Thereafter, when the Indian subsidiary made a subsequent reimbursement to the Dutch company, it did so without withholding tax. The I-T department, however, disallowed this reimbursement and initiated action against the subsidiary for having defaulted by not withholding tax.

The Delhi High Court pointed out that this was a case in which the income-tax department had already allowed a refund of the amount withheld from a similar reimbursement in the past. Therefore, prima facie, the Dutch company was not liable to pay tax in India and hence it was not obligatory on the part of its Indian subsidiary to withold tax. However, the court added that if, at a later stage, the income of the Dutch company became liable to tax in India, the I-T was vested with powers to initiate proceedings against the Indian subsidiary for not withholding tax.

The rationale of the Karnataka High Courts order last December that tax had to be deducted from all cross-border payments was based on the premise that the taxpayer did not have the expertise to decide whether any particular income was taxable or not in India. Such a decision would have to be left to the tax authorities. The Supreme Court in its order in November 2009, however, had stayed the Karnataka High Courts ruling till further notice.

This is an important ruling as the High Court has reiterated the principle that obligation to withhold tax would arise only if the income is liable to tax in India, said a statement from accounting firm BMR Advisory.

Sanjay Sanghvi, tax partner, Khaitan & Co added, When two high courts give contradictory judgments, one can rely on the judgement favourable to the assessee. The Delhi High Court judgement comes as a big relief to taxpayers.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Company Overview

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions