Does my Indian subsidiary have to file Form 26Q?
If it deducts tax on payments to residents in India other than salary, yes, and foreign ownership makes no difference to that. The return is a function of what the entity pays out, not of who owns it. A subsidiary paying Indian contractors, landlords, professional advisers, commission agents or interest to an Indian lender is deducting on domestic payments and reports those deductions quarterly. Parent-company reporting, consolidated accounts and the parent's own filings elsewhere are all beside the point here. The question to work through is simply a list of what the Indian entity paid in the quarter, and to whom.
Who reports it when the foreign parent pays an Indian supplier directly?
Look at who made the payment and who was obliged to deduct from it. Where the Indian entity pays a resident supplier, the Indian entity reports the deduction. Where a foreign parent settles an Indian supplier's invoice from abroad, the analysis depends on whose expense it is, whether the Indian entity is recharged, and whether the payment is in substance made on the entity's behalf. Group arrangements that route supplier payments through a parent for treasury convenience are the ones that go wrong, because nobody in either country treats themselves as the payer. Settle that question before the quarter closes rather than after.
We deducted nothing this quarter — do we still have to report?
Separate two things: whether you should have deducted, and what to report if you genuinely did not. The first is the question worth the time, because deductions missed on payments that required them are where the expense disallowance we see in assessments comes from. Work through the quarter's payments to residents and confirm, payment by payment, that each one either carried a deduction or did not require one, and keep the reasoning. If nothing was deducted because nothing needed to be, record how you reached that and confirm your reporting position for a nil quarter before the period closes, rather than assuming that silence is safe.
What happens if we never deducted on a contractor payment?
The consequence people expect is a charge on the payer. The one that hurts more lands in the payer's own accounts: disallowance of expenses for failure to deduct is a common assessment adjustment, so the cost of the contractor stops being deductible and the entity's taxable profit rises by the amount of the payment. That turns a compliance slip into a tax cost on income which has nothing to do with the contractor. The remedy runs through the deduction and the return, so the sequence is to establish what should have been deducted, deal with it, and get the entry into the quarterly return.
Does salary paid to our Indian staff go in Form 26Q?
No. This return covers deductions on payments to residents other than salary; salary deductions belong in the separate salary return. The split matters more than it sounds, because the items sitting at the boundary get put in the wrong one: director's fees, a retainer paid to someone who also holds an employment, consultancy paid to a former employee, or an arrangement described as a contract that is in substance employment. Decide the character of the relationship first and let the return follow from it, rather than letting whichever return the payroll software happens to produce decide the character.
We use an outsourced accounts provider — who is responsible for filing?
The obligation stays with the entity that made the payment. A provider prepares the return; it does not take on the consequence of a deduction that was never made or an entry naming the wrong payee. In practice the failures we are asked to repair are handover failures: the provider reports what it was given, and payments made outside the accounting system — a settlement, a one-off consultant, an amount paid directly by the group — never reach it. Before each quarter closes, reconcile the provider's list of deductions against the entity's own bank movements, and treat anything paid to a resident that is not on the list as a question rather than an omission.
What is TCS on foreign remittance?
Tax collected at source. When a resident individual remits money abroad under the Liberalised Remittance Scheme — or buys an overseas tour package — the bank or seller collects an amount of tax on top and deposits it against your PAN. It is not a cost and it is not a final tax: it appears in your annual tax statement and is set off against the tax on your return, with the excess refunded. The rates and the purposes they attach to have been amended repeatedly, so we confirm them for the remittance year. See LRS limits and TCS.
How would a foreign tax authority know I am resident there?
Mostly from information you or your bank already provided. Account-opening forms ask you to self-certify tax residence, and that certification is reported between authorities under the Common Reporting Standard or, for US accounts, under the FATCA framework. Beyond that: employer and payroll filings, property registries, immigration records and the tax filings of anyone who paid you. The realistic planning assumption is that the data arrives. See FATCA and information reporting.
