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Q. > Please Help: TDS on global income of employee
I want to seek your kind guidance on the below query related to deduction of TDS on global income of our employee.
Back ground of the case
Mr. A was employee of in Indian company XYZ Ltd (Holding Co) till October 2013 but it was transferred to the payroll of subsidiary company DEF Pte. Ltd at Singapore from 1st November 2013 on a project of 5 to 6 months.
DEF Pte Ltd is a company listed under the Singapore laws. As per Singapore laws DEF limited is not liable to deduct any withholding tax as well as employee is not liable to pay any tax there.
Questions require your kind attention
1. Is XYZ Ltd(Holding co) liable to deduct TDS on the income earned by employee from its subsidiary company DEF Pte Ltd in Singapore?
Does holding company need to obtain any undertaking from there employees in question w.r.t their salary earned from Singapore?
2. Under which sections of Income Tax Act, XYZ limited is require to deduct TDS?
3. Is there any way out by which XYZ Ltd can fulfill all the compliance of TDS without deducting the same??
Thanks & Regards,
Himanshu Aggarwal
Experts Panelist
Comments
heeral
19-Dec-2013 , 07:09:11 pmDear Himanshu, Wanted a few clarifications. Where is the employee providing the services ? Is he physically located in India ? Also, is the work being carried out for the Holding Company or for subsidiary company. The purpose is to determine who is the effective employer of the employee. If the employee is outside India and receiving salary outside India neither XYZ nor DEF is required to deduct tax.
heeral
20-Dec-2013 , 11:37:29 amFurther, TDS on salary would apply provided the income of the employee is taxable in India. If the employee is rendering services outside India. such salary income would not be taxable as per section 9. Thus situs of rendering services and residential status of employee would be required to determine applicability of TDS
heeral
20-Dec-2013 , 11:53:49 amYou have stated that project was for 6 months - if employee has stayed outside India for more than 182 days he would become non -resident and salary earned outside India would not be taxable. In case he is resident, Indian employer can complete the withholding tax compliance u/s 192 based on declaration provided by employer of his salary