Taxmen take it too far; want to tax foreign nationals for income earned in their own countries
Updated: May 08, 2014 12:34:55pm
New Delhi, May 8 (KNN) Taking it too far, the Indian taxmen want to subject foreign nationals, earning their commission from Indian exporters in their overseas markets, to the TDS (Tax Deducted at Source) and then claim its refund from the Indian tax authorities, the EEPC India said here today urging the Commerce and Finance Ministry to remove uncertainty in this regard in the next foreign trade policy.
“Even though there is a High Court Judgement (that the TDS cannot be levied on the commission earned by foreign agents on exports), the situation is not clear because of certain circulars by the Central Board of Direct Taxes (CBDT), causing a lot of inconvenience to the exporters who are finding it difficult to engage agents abroad in this backdrop,” EEPC India Chairman, Anupam Shah said in a statement here today.
It is estimated that a big sum of USD 15 billion is paid as commission to foreign agents. The commission varies between three-five per cent and India’s total exports are about USD 312 billion. On this USD 15 billion the Indian taxmen would like to impose TDS of at least ten per cent on the foreign agents working abroad.
Given the complexities of the international markets, the agents are a must, especially for the small and medium sized exporters who do not have internal wherewithal to scout for new markets.
“How do you expect a foreigner to come and claim the TDS refunds? He is not an assessee in India and yet our taxmen would impose TDS on foreign commission. This is strange and totally not workable. The result is that we are finding it extremely difficult to engage such agents. Why will they work for us if we deduct from their earnings which they are supposed to report to tax authorities in their own countries,” said the Chairman of the EEPC India (formerly known as the Engineering Export Promotion Council).
He said while the exporters have been representing to the Commerce and the Revenue Department and some circulars had come, it has not helped the tricky situation.
Shah said irritants such as these come in the way of exporters to go about their business in a usual way. The next foreign trade policy, which will be unveiled by the new government, should address such issues if India has to make a significant difference to the export level.
“We are languishing at around USD 300 billion in our total exports for the last two years while imports are in the range of USD 500 billion….the trade deficit cannot be sustained for long,” he said. (KNN Bureau)
“Even though there is a High Court Judgement (that the TDS cannot be levied on the commission earned by foreign agents on exports), the situation is not clear because of certain circulars by the Central Board of Direct Taxes (CBDT), causing a lot of inconvenience to the exporters who are finding it difficult to engage agents abroad in this backdrop,” EEPC India Chairman, Anupam Shah said in a statement here today.
It is estimated that a big sum of USD 15 billion is paid as commission to foreign agents. The commission varies between three-five per cent and India’s total exports are about USD 312 billion. On this USD 15 billion the Indian taxmen would like to impose TDS of at least ten per cent on the foreign agents working abroad.
Given the complexities of the international markets, the agents are a must, especially for the small and medium sized exporters who do not have internal wherewithal to scout for new markets.
“How do you expect a foreigner to come and claim the TDS refunds? He is not an assessee in India and yet our taxmen would impose TDS on foreign commission. This is strange and totally not workable. The result is that we are finding it extremely difficult to engage such agents. Why will they work for us if we deduct from their earnings which they are supposed to report to tax authorities in their own countries,” said the Chairman of the EEPC India (formerly known as the Engineering Export Promotion Council).
He said while the exporters have been representing to the Commerce and the Revenue Department and some circulars had come, it has not helped the tricky situation.
Shah said irritants such as these come in the way of exporters to go about their business in a usual way. The next foreign trade policy, which will be unveiled by the new government, should address such issues if India has to make a significant difference to the export level.
“We are languishing at around USD 300 billion in our total exports for the last two years while imports are in the range of USD 500 billion….the trade deficit cannot be sustained for long,” he said. (KNN Bureau)
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