TDS under section 195

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 July 2010 our manufacturing facility in India was audited by an organisation named AIB, based in Manhattan , USA ,and has given us a certificate for Good Manufacturing Practices ( something simailar to ISO stanadrds) . They do not have a permanant establishment in India . Their period of stay in india does not exceed 90 days . The clarification sought is as follows :

1)whether TDS need to be deducted form the audit fees, taking into acccount the DTAA with US?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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21 July 2010 Income tax has to be deducted under section 195 in view of the explanation to section 9(2) introduced through the Finance Act,2010.
But not sure on the DTAA with US.

Sunil

Sunil (Expert)
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21 July 2010 For DTAA with USA, this is Technical Fees and the rate is prescribed. That is 15%. Income Tax Act is having rate of 10% if you have approval of the agreement with receiver of income. You apply whichever rate is beneficial. However, if there is no PAN with deductee, use 20% rate if the prescribed rates are lower than 20%.

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