To get our books audited, we need to clear previous year's Audit Fee to Malaysian Auditor situated in Malaysia.
Due to -ve networth we cannot transfer funds to our Malaysian Subsidiary. Hence, we (Holdin Co situated in India) are making direct payment to Malaysian Auditor on behalf of our Malaysian Subsidiary.
My opinion is that since the liability has arisen outside India and it is the liability of our Malaysian Subsidiary, there should not be any TDS. But our Auitor is of the opinion that from 1.4.10 TDS @ 20% to be made since Malaysian Auditor does not have PAN in India.
Can anyone clarity the applicabilty of TDS please.
21 June 2010
According to me the transaction above is not falling u/s 9 and u/s 7 which are considered primary section while talking about foreign payments. So TDS will not be applicable. The new Section 206AA which has been inserted by Finance Act 2010 talks about the tax @ 20% if a person doesn't have PAN but this is applicable when TDS deduction is applicable on the deductee. As in this case TDS is not applicable so Section 206AA will also not be applicable.
CAclubindia
