05 May 2009
A Foreign National provides services in India, Whether TDS is applicable on this. If Yes, then Under which section? Also confirm whether it is necessary for the above person to apply for PAN in India?
05 May 2009
It is not clear from your query whether by a foreign national you mean an individual or any other person also. Further you have not made it clear that what is the nature of services are being provided by the foreign national in India. The country of residence of the non resident is also not clear . Assuming that you mean an individual and the nature of services being provided are technical services in India my response to the query is as under. The income of a non resident providing Technical services in India, is taxable in India under section 5 as the income has accrued and arisen in India read with explanation 2 to section 9 vii of the Income tax act 1961. The explanation 2 of subsection vii of section 9 defines the technical services as following – For the purposes of this clause, “fees for technical services” means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction78, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head “Salaries”.] However a non resident individual who is a resident of a country with whom Indian Govt. has entered into an agreement for avoidance of double taxation under section 90(1), that foreign national / individual can claim relief to the extent provided to in that agreemen. Section 90(2) provides as following in this regard 2) Where the Central Government has entered into an agreement with the Government of any country outside India under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee.]. India has entered in to treaty with more than 80 countries so far and in many agreement the income from technical services, even if provided in India is taxable in the country of residence of the non resident person unless services are provided for more than the specified period of time. In many of the treaties the specified period of time is between 90 to 120 days. So for example if services provide by a non resident who is a resident of Netherlands in India for less then 90 days, his income will be taxable only in Netherlands by virtue of provisions of DTAA between India and Netherlands, so no TDS would be required to be deducted from his income as his his income is not taxable in India. In some of the treaties the income from technical services are taxable only if it make available the technical skill. In such cases also no TDS is required to be deducted. Yes in other cases I do agree with expert . Anand that the TDS is required to be deducted from income of the non resident. The non resident whoes income is taxable in india needs to file ROI in India, hence needs a PAN.
CAclubindia
