tds

This query is : Resolved

Anil Kumar Reddy (Querist)
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06 May 2011 Hello,
Our client has purchased a machinery from US company. it is billed as cost seperate and installation, brokerage seperate.

as tds has to be deducted only on commission and installation charges. what is the effective rate of tds and What is impact of DTAA

Please answer at the earliest.

Regards and thanks,
Anil Reddy
caanilreddy@gmail.com

Sir Monoj Gupta

The said amount is taxable within the meaning of Income Tax Act. so what shall be the rate of Tds and impact of DTAA

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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07 May 2011 Tax has to be deducted at the lower of the rates given in:

1. The Income Tax Act
2. The prevailing DTAA between the two countries.

So, if the rate of tax given in DTAA is less than the rate of TDS, then such lower rate of tax to be applied for deduction.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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07 May 2011 First obtain a NO PE Certificate from the foreign party, to ensure that no TDS liability is there on the machine purchase portion and also the rate as per 115A is applicable on the instllation portion.

Then the TDS needs to be deducted @ 10.5575% if the foreign Company has PAN u/s 115A or otherwise @ 20% under section 206AA, on the installation charges.

Anuj
0-9810106211

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