08 December 2011
Dear Expertji We have one client in Dubai (Who does not have any presence or PE in India) who does certification work there on our behalf and we pay professional fees to him. He don't have PAN thus as per section 206AA of IT we deduct tax at 20% but he is arguing as Dubai is tax free country and double tax avoidance is saying no separate provision for UAE. Please help me in providing the solution whether to deduct Tax or not.
09 December 2011
The services rendered fall within the scope of section 9(1)(vii) and hence taxable in INdia by virtue of section 9(1)(vii)(b) read with Explanation to section 9. Therefore sum paid is deemed to accrue or arise in India. So tax is deductible but at the rate of 20 percent in this case because the person has no PAN.
CAclubindia
