Ltd Co - claiming back Indian witholding tax

Is it straightforward to claim back Indian witholding tax

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My brother has a small limited company through which he provides consultancy services. His latest contract is to supply services in India to an Indian Company. They have decucted 8% witholding tax from the payment of the first invoice and told him he should claim this back in the UK.

Is there a straightforward procedure for a UK Limited Company to do this?

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By Matrix
30th Sep 2020 13:25

Why do you think the UK government would repay Indian tax?

You need to check the treaty for the withholding tax rate on this source of income. If the tax withheld is in excess of the treaty then a reclaim has to be made to India.

If not in excess and it is a creditable tax in the UK then the company would need to claim it as a foreign tax credit on its tax return.

Also check the contract and whether there are any forms for the company to complete to reduce or eliminate the withholding or put him in touch with a tax adviser with international expertise.

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By MJShone
30th Sep 2020 13:41

Does this help? https://economictimes.indiatimes.com/wealth/tax/claiming-tax-benefits-un...

I've been through this process - but it was a few years ago.

I don't think this is a way to reclaim tax - just a way of making sure it's not withheld in the first place. However, if you tug on that thread, you may be able to unravel the problem. The Indian tax authority's website is available in English.

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Ivor Windybottom
By Ivor Windybottom
01st Oct 2020 09:37

Often the local accountants acting for the customer may be able to help advise if the withholding tax can be released/repaid. This is typically conditional upon receipt of evidence of UK tax residency, etc.

I don't recall whether there is scope to avoid withholding tax in India, but I believe it is sometimes a long process to get it back.

Double tax relief is only available if the Indian tax is not repayable, even if actions to obtain that repayment from the Indian tax authorities are not made.

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