206AA and DTAA

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 June 2011 The income as per The Act is taxable @ 10% and as per DTAA the income is not taxable then whichever is beneficial i.e. 0% tax will be considered..but if the assessee fails to furnish PAN will the income be charged @ 20% or it will not be taxed at all as per DTAA.. kindly provide some case laws for the same..thank you..

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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08 June 2011 1) Mr. S.Sairam in his article (see article section of caclubindia) observes that 206AA prevails over 90(2).
2) Mr. Venkat Rao Marella in his article (see article section of caclubidia) concludes that 206AA prevails over 90(2).
3) Dr. Vinod.K. Singhania in his article in SIRC Newsletter (July 2010 issue) says 206AA cannot override the provisions of DTAA. If a tax treaty provides a tax rate which is lower than 20 %, tax will be deducted at the lower rate,even if PAN is not furnished by the recipient.

Unless CBDT comes out with a notification/ amendment in law at the earliest, the issue will lead to prolonged litigation.

No case laws has been reported so far.

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