International Withholding Tax

Question

Hi

We recently invoiced a company in India and when paying they have deducted 20.8% withholding tax.  What is the best way to record this deduction for tax purposes.

thanks

Princess_R · Answer

HI @michlsa,

Thank you for your post.

In this matter, if you do need to deduct a portion of an invoice for tax purposes, you would need to create the appropriate tax code on the transaction or create a new account that you can use in that line on the invoice with a negative value to reduce the overall total amount of the invoice.

Please note that we always advise seeking assistance from your accountant regarding such queries.

Please feel free to create a new post again if you need help in the future, and we're always here to help.

Cheers,

Princess

Mike_James · Answer

Hi @michlsa , Australia has a double tax agreement with India, so you should be able to claim this amount as a tax credit in the next company income tax return. You should make sure you get the correct documentation from India, some form of receipt from the tax authorities. Your accountants can advise further.

Pending confirmation, allocate this deduction (on your invoice or as a separate credit) to your income tax (liabiity) account, and let the accountants sort it out.