TDS on commission to Foreign co

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Shankar (Querist)
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16 November 2010 We are manufacturer. We had imported some material from china. The co had raised inv on us for the material and debit note for Commission on imported inv amt. This Co does not have any office in India. It is pore foreign co. My query is, do we deduct TDS on Commission? if yes than @ what rate? and if no. then why?

Shan

CA.Madhusudan B.P.

CA.Madhusudan B.P. (Expert)
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17 November 2010 Shankar,
What for commission is being paid to the China Vendor?
OR Commission is paid to other agent who had helped in acquiring the materials?
If the commission is paid to pure agent,(independent broker)no income arise or deemed to accrue or arises hence no TDS
On the other hand, Ifyou have business connection, & by virtue of this bussiness connection eventhough the commission is paid outside India, TDS applies by the provision of Sec 9(1)

Shankar

Shankar (Querist)
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18 November 2010 Dear Madhusudan sir,

Thanks for the reply.

We are paying commission to the Vendor from whom we had imported the goods. As per you we have to deduct TDS at the time of payment but at what percentage. Please reply.

thanks
Shankar

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CA.Madhusudan B.P.

CA.Madhusudan B.P. (Expert)
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18 November 2010 I am not very clear whether there exist any business connection with your company?
IF AT ALL TDS IS APPLICABLE KINDLY GOTHROUGH THE LINK

http://law.incometaxindia.gov.in/DIT/File_opener.aspx?fn=http://law.incometaxindia.gov.in/Directtaxlaws/cbdt/dta/A1_China.htm

WHICH IS DTAA OF INDIA & CHINA.

IF THE VENDOR DOES NOT HAVE PAN IN INDIA, THEN SIMPLY DEDUCT 20%.

Shankar

Shankar (Querist)
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18 November 2010 Dear Madhusudan sir,

Thanks for the reply.
The vendor does not have any PAN no because he is from China. and we have connection with the vendor. As per our consultant any income earned in India is liable for Tax and we should have to deduct TDS @ 30%. Pl confirm.

thanks
Shankar