Section 194J l Fees for professional or
technical services
1161. Clarification
regarding payments to persons resident in India by foreign companies or foreign
law firms that have no presence in India
1. Representations have been received from
some law and accountancy firms that are receiving fees for professional
services from foreign companies or foreign law and accountancy firms saying
that the latter find it very difficult to comply with the requirement of tax
deduction at source under section 194J of the Income-tax Act and its payment to
Central Government in the prescribed manner and within the prescribed time in
the absence of any agent or business connection or permanent establishment in
India. They have, therefore, requested that the provisions of section 194J of
the Act may not be made applicable to the fees for professional services paid
by foreign companies or foreign law and accountancy firms to persons resident
in India.
2. After carefully considering the practical
difficulties involved, it is felt that, any fees paid through regular
banking channels to any chartered accountant, lawyer, advocate or solicitor who
is resident in India by the non-residents who do not have any agent or business
connection or permanent establishment in India may not be subject to the
provisions of tax deduction at source under section 194J of the Income-tax
Act.
3. However, foreign companies or foreign law
and accountancy firms are required to send a quarterly statement, indicating
the name and address of the person to whom the payments are made, to the Deputy
Secretary, Foreign Tax Division, CBDT, Department of Revenue, Ministry of
Finance, New Delhi. The first quarterly statement would be from the quarter
ending 31st December, 1995.
Circular : No. 726,
dated 18-10-1995.
1162. Discontinuance of
requirement of sending quarterly statements in case of payments by foreign
companies and law firms to residents in India
1. Attention is invited to Board’s Circular
No. 726 dated 18-10-95 (F. No. 133/80/95-TPL) wherein, inter alia, it
was stated that the foreign companies and the foreign law and accountancy firms
that have no presence in India should send a quarterly statement to the Deputy
Secretary, Foreign Tax Division, CBDT regarding the payments made to the Indian
residents for professional service.
2. The Board has since reconsidered the
matter. As the details of payments made to the Indian residents can easily
be verified or collected wherever required, it has been decided to
discontinue with immediate effect the requirement of sending the above
quarterly statements.
Circular : No. 766,
dated 24-4-1998.