08 October 2011
Our Company had paid an amount of Rs.8.5 lakhs to a foreign Co. of China for Technical consultancy Services and the TDs was beared by us at the rate 10%.But according to sec. 206(AA)the person not having Pan No. is liable to TDS deduction @20%. so i wanted to know that is Sec206AA apllicable in case of Foreign Co. also because according to treaty with China we are liable to deduct only @ 10% for any payments made. Please help me out regarding this matter
08 October 2011
Yes, Section 206AA is applicable in case of Foreign Companies Also.
Section 206AA overrides all other provisions of Income Tax Act. Hence, section 90 which entitles for the beneficial provision as per domestic law and DTAA is not attracted.
Therefore, you need to ask the foreign company to get the PAN number in India else the TDS will be @ 20%
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