TDS on payment to foreign party
This query is : Resolved
19 June 2008
If I make payment of commission to any foreign party, in that case should I deduct the TDS, if yes, what would be the rates for that. Plz reply to my this query.
19 June 2008
TDS ON PAYMENT TO FOREIGN PARTIES
19 June 2008
I think it comes under section 195(i) it says any income other than Royalty, fees for technical service, professional fees etc.. then the rates will be as follows:-
I)----if the recipient is non resident and non corporate assessee :-
A} If the payment is Less than 10,00,000( in case of individual) or less than 1,00,00,000 in case of firm.
then rate will be 30%+(3% Edu.cess on 30%) i.e. 30.90%
B} If recipient is individual and payment exceeds 10,00,000 or a firm only and payment exceeds 1 Crore to the firm, then tds rate @ 33.99%( including 2.5% surcharge)
II)--- If the recipient is non domestic company and
A) If payment is Less than 1 Crore then tax rate will be 40%+3% Edu. cess i.e 41.20% effectively.
B) If the payment is more than 1 Crore then effective tax rate will be 42.23% ( Including surcharge @2.5%)
I)----if the recipient is non resident and non corporate assessee :-
A} If the payment is Less than 10,00,000( in case of individual) or less than 1,00,00,000 in case of firm.
then rate will be 30%+(3% Edu.cess on 30%) i.e. 30.90%
B} If recipient is individual and payment exceeds 10,00,000 or a firm only and payment exceeds 1 Crore to the firm, then tds rate @ 33.99%( including 2.5% surcharge)
II)--- If the recipient is non domestic company and
A) If payment is Less than 1 Crore then tax rate will be 40%+3% Edu. cess i.e 41.20% effectively.
B) If the payment is more than 1 Crore then effective tax rate will be 42.23% ( Including surcharge @2.5%)
19 June 2008
Also pl check the country to whom commision is paid (for the DTAA provisions) because provision is :-
"The TDS rate should be lower of DTAA tax rate or Rates prescribed under section 195
"The TDS rate should be lower of DTAA tax rate or Rates prescribed under section 195
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