TDS

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PSETHI (Querist)
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30 July 2009 We have to remit the amount to foreign company of Singapore.(as professional fee).(Amount to be remitted - S$ 7000).

What rate of TDS to be deducted for such Remittance.

What will be the actual remittance.

taxindiaconnect

taxindiaconnect (Expert)
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30 July 2009 No TDS is required to be deducted from such payments as mentioned in your query. Section 195 of the Act casts an obligation on a resident tax payer making payment to a non resident in respect of an income taxable in India to withhold tax at the rates applicable. The tax is not required to be deducted from the payments made outside India to a NR if the income of NR is not taxable in India. The income of the NR is taxable in India if it satisfies certain conditions.

As per section 5 the income of NR should have been either be received or deemed to be received in India or should be accrue or deemed to accrue in India for such income to be taxable in India.

As per section 9 the income of a resident by way of fees for service for procuring the machinery would be treated as technical fees and will be deemed to accrue and arise in India, the income will be taxable in India with in the meaning of deeming provision under section 9 of the Act as the explanation 2 to section 9 (1) (vii)

However As per section 90 of IT Act one can take the benefit of provision of Double taxation Avoidance Agreements ( DTAA) on the payment of royalty if the recipient of the income from technical fees is a resident of a country with whom India has a DTAA. Currently India has DTAA’s with more then 75 Countries including Singapore . As per article 12 of the said DTAA with UK the fees for technical Services will be taxable only if such services make available any technology or secret information to the resident payer in India. Since in your case the services are for professional nature which do not make available any such information, the fees paid is not taxable in India. So no TDS is required to be deducted from such payments.