30 March 2013
Previously, there was an exemption Circular for Commission to Non-resident but later on the CIrcular was withdrawn. Hence , the nature of Payment and rate of TDS depends on the facts and circumstances of the case.
If Commission is on account of Business Income for the foreign agent and the foreign agent is working in an independent capacity, no TDS is deductible if the foreign agent does not have any Business connection in India or PE in India.
However if the Commission is in the nature of Market Research, Feasibility Study etc, then it falls under the category of Fees for Technical Services and hence TDS is deductible @ 10 % if there is any favourable DTAA irrespective of any PE in INDIA or not.
In absence of PAN, the rate of deduction if Commission is in the nature of FTS is 20%.
In case of any further query, you can drop a mail at mehul@raseshca.com
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