30 December 2012
A foreign company(based at Hong Kong,having no established in India at all) is going to supply two video cameras(sourced from Japan) to an Indian Branch of another foreign Company. Now the end user is saying that it will deduct 20% tax as TDS as the foreign company(Hong Kong Based) is unable to provide the PAN card.And this is a permissible activity under income tax act, 1961 [Reference Explanation 4 to 9(1)(iv)] and since, Beneficiary do not have PAN in India. Tax should Deduct @ 20% (Reference Section 206AA read with Section 195 of Income Tax Act, 1961].
My question is whether the above activity is a geniunie tax deduction or not...
CAclubindia
