With the TDS being a deduction 'at source' and therefore not really the responsibility of the foreign company, is it customary to mention it when quoting and Indian client?

Thanks very much.


It is not customary to mention in the quote. As answered in the previous post, the standard used in cross-border agreements is

"Any taxes current or future arising due to this transaction in India is the responsibility of the buyer".

It is not just TDS, this is just one form of tax applicable in certain condition, there could as well be Import duty [customs duty], Service Tax and Local municipal taxes or host of other taxes that may come into effect at later point in time ...

It is a standard statement used in all contracts [Quotes, invoices] that would cover. The obligation of TDS or import duty etc is the obligation of Buyer and the Indian law cannot compel a Non-Indian entity.

It's best you take the advice of a Tax consultant who specializes in International taxation.


TDS is actually the tax paid on the transaction on behalf of the seller. That is, you as a foreign seller can take a tax credit in your country for the TDS paid.

If you sell something worth $1000 to an Indian company, the Indian company may have to pay 20% TDS - $200 - and then give you the rest. The $200 then can be claimed by you as taxes paid when you do your tax filings (so your overall tax liability will reduce to that extent).

This is for sellers resident in all countries with which India has a Double Tax Avoidance Treaty, which exists with 83 countries: http://law.incometaxindia.gov.in/DIT/intDtaa.aspx

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