23 November 2010
We have given our company advertisemtn in a magazine published at Geramnay and the amount payable by us is 606.90 Euro. Whether tax is to be deducted from payment under the I.T Act. Please advice
23 November 2010
Under section 195 of the Income-Tax Act, 1961 any person responsible for paying a non-resident “any sum chargeable under Indian tax law shall deduct income-tax thereon” at the rates in force at the time of credit of such sum to the account of the payee or at the time of actual payment thereof, whichever is earlier.
Thus TDS is required to be deducted only if the income of the advertisement provider is chargeable under India tax law. This further depends upon if the income of the advertisement provider is received in India or accrued in India or deemed to be received or accrued in India (section 9). If payment is made outside India, then it is not received in India. If the advertisement provider provides the services outside India, then the income is not accrued in India
The advertisement company's income does not fall under the provisions of section 9, a. if the payment is made outside India,
b. the advertisement company does not have (or is not available)any fixed base in India, and
c. the advertisement company does not provide any services in India.
INCOME DEEMED TO ACCRUE OR ARISE IN INDIA Section 9(1)
The incomes deemed to accrue or arise in India includes all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situated in India.
***Section 9(1)(c): In the case of a non-resident, being a person engaged in the business of running a news agency or of publishing newspapers, magazines or journals, no income shall be deemed to accrue or arise in India to him through or from activities which are confined to the collection of news and views in India for transmission out of India.**
*****So no income tax ******is required to be deducted if the income of the advertisement provider does fall under the ambit of deeming provisions of section 9 of the IT Act.
23 November 2010
Yes, definately. TDS shall be deducted as per DTAA or local TDS rates which ever is beneficial to assessee sa per Sec 90.
NOTE : IF THE GERMAN DOES NOT HAVE PAN IN INDIA, THEN TDS SHALL BE DEDUCTED @ 20%.
If with holding tax in not deducted, the provisons of Sec 40a would apply & the amount of advertisement is disallowed for tax purpose.
If you dont want to deducted tax, you can make an application to the ITO international taxation clearing mentioning that the amount may not be taxable in India. Based upon the order of the ITO International, you can gohead.
CAclubindia
