TDS on Payment

This query is : Resolved

CA Sumit Tayal (Querist)
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14 July 2010 Dear Sir

Please solve this following query-

What is the % of TDS deduct on following payament
1. X co. (Indian company) give payment to Y (Resident in india) for professional services in Bangladesh
2. X co. (Indian company) give payment to Z (Citizen of Bangladesh) for professional services in Bangladesh

Please Reply
Its Urgent

Regards
Sumit Tayal

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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14 July 2010 1) TDS TO BE DEDUCTED @10% U/S 194J
2) TDS TO BE DEDUCTED U/S195 @ HIGHER OF THE FOLLOWING RATES---
a) NORMAL TAX RATE OR RATE AS PER DTAA
b) 20% FOR NON FURNISHING OF PAN.

CA Sumit Tayal

CA Sumit Tayal (Querist)
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14 July 2010 Please give some more detail for 2nd point
like tds rate etc

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HARIHARAN KRISHNAMURTHY

HARIHARAN KRISHNAMURTHY (Expert)
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14 July 2010 Kindly Check the DTAA with Bangadesh.

Extracts below :

ARTICLE XV - Independent personal services - 1. Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that Contracting State. However, such income may be taxed in the other Contracting State, if—

(a) he has a fixed base regularly available to him in the other Contracting State for the purposes of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or

(b) he is present in the other Contracting State for a period or periods exceeding in the aggregate 120 days in the previous year or income year concerned of that Contracting State.

2. The term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities, as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants.

ARTICLE XVI - Dependent personal services - 1. Subject to the provisions of Articles 17, 19 and 20, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised such remuneration as is derived therefrom shall be taxable only in that other Contracting State.

2. Notwithstanding the provisions of paragraph (1), remuneration derived by a resident of a Contracting State in respect of and employment exercised in the other Contracting State shall be taxable only in the first-mentioned Contracting State, if—

(a) he is present in that other Contracting State for a period or periods not exceeding in the aggregate 183 days during the ‘previous year’ or ‘income year’concerned or he is present in that other Contracting State for any period which forms part of a continuous period exceeding 183 days throughout which he is present in that other Contracting State, and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of that other Contracting State, and

(c) the remuneration is not deducted from the profits of a permanent establishment chargeable to tax in that other Contracting State.

3. Notwithstanding the provisions of paragraphs (1) and (2) of this Article, remuneration for personal services performed aboard a ship or aircraft operated by an enterprise of a Contracting State, in international traffic shall be taxable only in that Contracting State.