Tds

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RAKESH AGRAWAL (Querist)
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04 October 2011 We are a Pvt. Ltd. Co. registered in India. We had made an agreement with U.A.E. based organization for set up of a Bar & Rod Mill in India. U.A.E. based organization will set up the plant for us in our plant premises in India. Total service charges shall be USD 39400000 CFR India. Are we liable to deduct TDS? If yes, at what rate? Please reply.

Vishal D Shah

Vishal D Shah (Expert)
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04 October 2011 Under Indian Income tax Act, this is chargeable to tax as income is arising in India. Sec 9.

On DTAA front with UAE, this could attract construction PE or service PE under Article 5 & consequently could be chargeable to tax as business profits of UAE company. However if PE can be avoided, tax could be saved as there is no FTS clause in Indo UAE DTAA.

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cavishalshah @ gmail.com