TDS
Querist :
Anonymous
(Querist) 08 January 2011
This query is : Resolved
We have a constructon partnership firm where there are 3 partners viz. A,B,C. Bis an N.R.I. and lives in Singapore.The architect of the bilding is also situated in Singapore and has no business connection or P.E in India.
Now B out of his earnings at Singapore pays architect fees. Now in our books we will credit B's capital A/C and debit the building a/c.
Qs1. Is T.D.S. deductible? if so at what rate?
Qs2. Is this transaction allowed in accordance with F.E.M.A. ?
Vineet
(Expert) 08 January 2011
1. The liability of withholding tax depends upon constitution of Architect entity. If Architect is only Individual whi neither provides services through a fixed base in India nor stayed in India for more than 90 days in India in relevant FY, he is not liable to tax in India and therefore no WHT is leviable. But if the Architect is other than an Individual, the services certainly fall under category of fee for technical services and WHT deductible @10% of payment at the incidence of credit itself.
2. In my opinion the transaction is not allowable under FEMA as all current account payments should be routed through an authorised dealer or bank.
