TDS at Higher Rate if No PAN for Non-Resident

This query is : Resolved

Sachin Mohite (Querist)
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19 April 2010 Dear Sir/s

As per Press release of CBDT on 20/01/2010, if party not having PAN, TDS @20% will be applicable, which is applicable to Non-Resident also.
In this connection, please advice me,If non-resident, not having PAN and Rate as per DTAA is lower (e.g - 10%), then, whether we are supposed to deduct TDS @ 10% or 20%. As per prevailing rule, TDS on foreign payments should be made as per Finance Act or DTAA, WHICH EVER IS LOWER. So please advise, whether to deduct tax @10% (Minimum Rate as per DTAA) or 20% (Maximum Rate).

taxindiaconnect

taxindiaconnect (Expert)
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20 April 2010 The Provisions of section 206AA which has brought this change in the IT Act relating to PAN starts with a non obstente 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.