TDS on Foreign Payment @20% or 10%
This query is : Resolved
28 April 2010
Dear Sir
One of our client intends make foreign payment for Royalty in the month of April. However the Provision for the same is made on 31st March 2010, however tax is yet to be deposited, since the time limit for depostion is 30th May2010.
However foreign party does not have PAN in India. Since the payment to be made in April 2010 for expense which is provied for in March 2010, which rate of tax to be applied for deduction - either 20% (heigher rate for No PAN) or 10% (as per DTAA)?.
Regards
Sachin Mohite
One of our client intends make foreign payment for Royalty in the month of April. However the Provision for the same is made on 31st March 2010, however tax is yet to be deposited, since the time limit for depostion is 30th May2010.
However foreign party does not have PAN in India. Since the payment to be made in April 2010 for expense which is provied for in March 2010, which rate of tax to be applied for deduction - either 20% (heigher rate for No PAN) or 10% (as per DTAA)?.
Regards
Sachin Mohite
28 April 2010
10% as per DTAA.
Views of other expert solicited.
Views of other expert solicited.
28 April 2010
sec related to this is an overriding section. it also override the DTAA sec. if no PAN is furnished and there is DTAA agreement than tax will be deducted @20% and not as per DTAA
28 April 2010
Doshi Sir..
thing is that client has made provision on 31st March 2010. And the relevant section is effective from 1st April 2010. Should we apply higher tax rate at the time of payment only, even if amount is provided for in March 2010.
thing is that client has made provision on 31st March 2010. And the relevant section is effective from 1st April 2010. Should we apply higher tax rate at the time of payment only, even if amount is provided for in March 2010.
28 April 2010
FOR PAYMENT U/S 195 THERE ARE TWO RATE IRRESPECTIVE OF PAN GIVEN OR NOT.
1) NORAMAL TAX RATE (30.9%)
2) DTAA RATE
LOWER OF TWO IS APPLICABLE
1) NORAMAL TAX RATE (30.9%)
2) DTAA RATE
LOWER OF TWO IS APPLICABLE
11 May 2010
The provision of section 206AA as amended vide finance Act 2010 are applicable from 01.04.2010, thus the provision are not applicable for expenditure provided as at 31.03.2010 hence the rate of TDS will reamin 10%
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