TDS is not deductable on the payment made to search engine provider (Google or yahoo) for advertisement or display of banner at site, as same is business income and in absence of permanent establishment in India same cannot be considered as income taxable in India.
The assessee has utilises the internet search engine such as Google, Yahoo etc. to buy space for advertising on the internet on behalf of its clients. The search engine carries out its own programme whereby the assessee books certain words called “key words”. Whenever any person searches through the net for a specific “key word”, the advertisement of the assessee or its client is displayed. The price charged for such booking depends on type of phrase, its popularity, usage etc. The search engine renders this service outside India through internet.
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