Please Help: TDS deduction U/S 195
Posted Date : 16-Oct-2011 , 03:28:56 pm | Posted By AKHIL MAHESHWARI
One Question related to TDS deduction U/S 195 " When an employee working under Foreign Parent Company comes to work in Indian Co. and he gets his salary from Foreign Company but that Foreign Co. raises Dr. Note to the Indian Co. and Indian Co. Pays salary to the FOreign Company for that employee " So TDS should be deducted on such payment made by Indian Co. on Such Dr. Notes or not ????
Category : Income Tax | Answers : 1 | Comments : 1 | Hits : 439
Answers
Answer By: Ashish Karundia
Dear Akhil,
In the instant case, when the foreign parent company is making payment of salaries to their employees working in India, then they itself are responsible to deduct TDS u/s 192 of Income Tax Act, 1961 [ Please refer the judgment of Supreme Court in the case of Eli Lilly & Co. India Pvt. Ltd. - Civil Appeal No.5114/2007].
Further, when the salary payment made to employees by the foreign parent company is reimbursed by the Indian company, then there is no need to deduct TDS u/s 195. However, this view (i.e. non deduction of TDS on reimbursements) can be contended by the department, in which case the same needs to be litigated at appropriate judicial forum.
Hope the above suffice.
In the instant case, when the foreign parent company is making payment of salaries to their employees working in India, then they itself are responsible to deduct TDS u/s 192 of Income Tax Act, 1961 [ Please refer the judgment of Supreme Court in the case of Eli Lilly & Co. India Pvt. Ltd. - Civil Appeal No.5114/2007].
Further, when the salary payment made to employees by the foreign parent company is reimbursed by the Indian company, then there is no need to deduct TDS u/s 195. However, this view (i.e. non deduction of TDS on reimbursements) can be contended by the department, in which case the same needs to be litigated at appropriate judicial forum.
Hope the above suffice.
Comments
AKHIL MAHESHWARI
23-Oct-2011 , 01:32:11 amthnx ashish ji.....