TDS applicable even when salary paid abroad for services rendered in India – Supreme Court‘s landmark decision
EXTRA-TERRITORIAL jurisdiction of the Income Tax authorities has always remained a major bone of contention. What has sharpened this issue in public domain is the show cause notice of the Revenue, demanding the capital gains tax to the tune of Rs 8000 Crore from Vodafone B V for a deal struck outside India and payments made in a tax haven. But what may lend a solid bout of support to the Revenue's stand is the Apex Court's latest ruling in as many as 104 Civil Appeals filed by non-resident companies. The Supreme Court has held that the TDS provisions, which in association with the charging provisions, form an integrated code, will extend to the Home salary or special allowances paid to expatriate employees by a non-resident company for services rendered in India as seconded employees of a joint venture in which the non-resident company is a partner.
So now Indian Income Tax TDS provisions travel beyond the geographical shores (and lands) of India.
Will this make the Service Tax department stronger? If TDS can be applied for payments made to an employee abroad, what is wrong in collecting Service Tax on services received/rendered/provided abroad as is convenient and confusing?
The Supreme Court case was all about with-holding tax and we couldn't withhold this landmark case till Monday.
So we bring it to you today –See Breaking News.