DTAA
This query is : Resolved
18 October 2010
sec 206A says if payee not provided the PAN no , the rate of tax deduction is higher of the following three,,
1. rate prescribed in Act
2. Special rates
3. 20 %
the question is , is it applies to
Sec 90(2), because a foreigner (non resident) may not have the Indian PAN Number,,, generally....
1. rate prescribed in Act
2. Special rates
3. 20 %
the question is , is it applies to
Sec 90(2), because a foreigner (non resident) may not have the Indian PAN Number,,, generally....
18 October 2010
yes provision is applicable also foreigner
18 October 2010
I agree with Naveen. 206A applies to everyone. Idea is to make accountable
18 October 2010
Dear all experts, an interesting discussion. I would like to add that The Provisions of section 206AA which has brought this change in the IT Act relating to PAN starts with a non obstinate clause as following -
“Nothwithstanding anything contained in any other provision of this Act ………..,”
This mean the provision of section 206AA override all the provisions of the income tax Act 1961 including section 90 which provides that in case of a non resident the tax rates as per DTAA or IT Act which are more beneficial shall apply is also overridden. This in your query tax rate @ 20% shall apply if PAN is not available. Where as the question is that all foreign companies will not apply for PAN and will try to pay withholding tax @ 20% even where the rate of tax is higher. The Draftsman have taken enough care of this aspect also as the section provides that in such situations TDS @ 20 % or applicable rate as per IT Act, would apply.
Hope this throws some clarity on the issue.
“Nothwithstanding anything contained in any other provision of this Act ………..,”
This mean the provision of section 206AA override all the provisions of the income tax Act 1961 including section 90 which provides that in case of a non resident the tax rates as per DTAA or IT Act which are more beneficial shall apply is also overridden. This in your query tax rate @ 20% shall apply if PAN is not available. Where as the question is that all foreign companies will not apply for PAN and will try to pay withholding tax @ 20% even where the rate of tax is higher. The Draftsman have taken enough care of this aspect also as the section provides that in such situations TDS @ 20 % or applicable rate as per IT Act, would apply.
Hope this throws some clarity on the issue.
09 November 2010
thaks a lot
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