Enquiry about tax on services supplied from UK to India

Question posted by Andrew Milton-Thompson, on behalf of In2Search Ltd in London

I am in discussion with a major company in India about my company providing a specialised recruitment service. The work would be carried out by my company here and across Europe.

They have advised me that my invoices to them would be subject to a 25 to 28% deduction of local tax before their payment to me.

I would like to understand how this works, and what reciprocal arrangements are in place with the UK to avoid double taxation. My company is of course subject to UK corporation tax and VAT.

Please can you advise me.

Thank you,

Yours sincerely,

Andrew Milton-Thompson
Office: +44 (0)207 193 8035
Fax: +44 (0)207 127 0554
Mobile: +44 (0)7984 789529
amt@in2search.com

In2Search Ltd
International Executive Search for Industry
42 Berkeley Square, London, W1J 5AW
www.in2search.com

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Vijay Jasuja, on behalf of UK Trade & Investment India in Mumbai, India.

Dear Andrew,
Yes, there is a 'Withholding Tax' on services provided by a foreign (non Indian) provider. The base rate of Tax should be 20% (there could be surcharge over and above that). Most important is that the deductor (Indian company) will provide you a certificate stating the amount of tax deducted in India. The same amount can be claimed as a tax credit against your Income Tax liability in UK.

If you need, I can connect you to a Chartered Accountant in India, who can provide more guidance.

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kiran sharma, on behalf of UK Trade & Investment India in India.

Hi Andrew,

Following on from Vijay's response. There is a double taxation agreement between India and the UK and company is entitled to pay tax only to one Government entity. I have picked up these two contacts from our database. You could contact them to check the exact tax laibility.

Mr. Vikram Gera - Senior Vice President
T.R. Chadha & Co.
B – 30, Connaught Place, New Delhi – 110001

Tel. +91 11 43259900
Fax No. +91 11 43259930
Mobile : +91 9810253570
Email : vikramgera@trchadha.com
Website : www.trchadha.com
The firm has 12 partners and around 300 staff including more than 80 Chartered Accountants supported by specialized experts on IT, Financial Management, Engineering, Legal and other technical areas.
• Accounting and Audit
• Business Advisory and Assurance
• Domestic Tax
• International Tax
• Corporate Consulting
Mr. Gaurav Sahu
CEO
ValueOnShore Services Private Limited
B-97, Gulmohar Park,
New Delhi - 110 049

Tel.: +91 11 416 19192
Fax No. +91 11 410 96279
Mobile : +91 9811969933
Email : gaurav.sahu@valueonshore.com
Website : www.valueonshore.com
ValueOnShore is an accounting and advisory services firm helping companies identify and capitalize on business opportunities throughout the world. The service offerings are Finance & Accounting Services, Risk Advisory Services, Investment Banking Solutions and Staff Augmentation Services.

Hope this helps,

Kiraan Sharma
UKTI, New Delhi

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