Payment of consultancy charges to nri

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2013 Hi

In our case we are payment $ 1000 to a NRI who comes to india and gives advisory Services in india. What will be rate of TDS in this Case and whether it is income accrued or arisen in india under section 5(2)
or it will be falls under section 9 ( deemed to be accrured or arisen in india )

Thanks

TKKKKKK

TKKKKKK (Expert)
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10 May 2013 t.d.s. rate will be 10% plus cess. it is income accrued in india.

Deepak Agrawal

Deepak Agrawal (Expert)
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10 May 2013 Yes it is covered u/s. 9(1)(vii) r.w.s. 5(2) of the Act.

However, If NRI relates to a Country with whom India has entered into DTAA, then you have to Analyse Article 15, "independent personal services" of that DTAA. if conditions of Article 15 is satisfied, then no tax liability arises.

further, if article 15 does not apply, then analyse Article 12 "Fees for included services" and if technology is made available to you, then it will be covered for net 10% of tax rate as per Article 12.

if it is not covered in any of the above article, then it will liable to withholding tax @25.75% in India as amended by finance bill 2013.

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Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2013 Dear Sir

NRI is from Dubai

Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2013 Dear Sir

In Our Case NRI comes to India to provide Advisory services. so It should be Fall Under Section 5(2) means accrued in india. Section 9(1)(vii) applicable only in case of " Deemed to be accrued or arisen in india" but in our case income is direcly accrued in india because NRI is rendering services in india.

In Form 15CB we have to mention Section 5(2)

Deepak Agrawal

Deepak Agrawal (Expert)
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10 May 2013 Thus, Article 14 of DTAA between India and UAE is relevant. which is as under:

ARTICLE 14 - Independent personal services

1. Income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State, except in the following circumstances when such income may also be taxed in the other Contracting State :
(a) if he has a fixed base regularly available to him in the other Contracting State for the purpose 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) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant "previous year" or "year of income", as the case may be; in that case only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.

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

Check whether your case is covered under this article. further which advisory service is provide? is it covered under the professional services as defined in the Article 14 above.

Link of DTAA is as under:

http://law.incometaxindia.gov.in/DIT/File_opener.aspx?fn=http://law.incometaxindia.gov.in/Directtaxlaws/cbdt/dta/A1_UAE.htm