Tds applicability on sez party

Answer 1

TDS applicability on SEZ (Special Economic Zone) parties can be a bit complex. General Rule: For domestic transactions, TDS is applicable on payments made to residents. However, SEZs are treated as foreign territories for tax purposes, which affects TDS applicability. TDS on Payments to SEZ Units or Developers: According to the Income-tax Act, 1961, TDS is applicable on payments made to SEZ units or developers, but only if the payment is for a specific service or goods. For instance, if an SEZ unit pays for rent, maintenance charges, or electricity, TDS might be applicable under sections like 194I. Import of Goods: If goods are imported from an SEZ, TDS is not required to be deducted, as imports are exempt. Section 194Q and SEZ: Section 194Q deals with TDS on purchase of goods exceeding ₹50 lakhs. However, its applicability on SEZ transactions is unclear. It's recommended to consult a tax expert or refer to specific tax advisories for guidance . To ensure compliance with TDS regulations, it's essential to consult with a tax professional or refer to the latest tax advisories and circulars