If your overseas supplier is a non-resident and does not have a PAN (Permanent Account Number) in India, here's the guidance regarding TDS (Tax Deduction at Source) and issuance of TDS certificates:
1. **TDS Rate for Fees for Technical Services (Section 194J):** - Fees for technical services provided by a non-resident are typically covered under Section 194J of the Income Tax Act, 1961. - The TDS rate under Section 194J for payments to non-residents is generally 10% of the gross amount of the payment. - This rate could be subject to reduction under the applicable Double Taxation Avoidance Agreement (DTAA) between India and the country of residence of your supplier. You should verify the DTAA rates to ensure correct deduction.
2. **PAN Requirement:** - According to Indian tax laws, PAN is necessary for TDS deduction and compliance purposes. However, if the non-resident supplier does not have a PAN, you can still deduct TDS by applying for a TDS exemption certificate from the Assessing Officer (AO) under Section 197 of the Income Tax Act. - This exemption certificate will specify the rate at which TDS should be deducted or may exempt you from TDS requirements, depending on the circumstances.
3. **Issuance of TDS Certificate:** - If the non-resident supplier does not have a PAN, you can issue a TDS certificate without PAN details. The certificate should mention the TDS deducted, the rate at which it was deducted, and other relevant details as per Form 16A. - Ensure that the TDS certificate accurately reflects the TDS deducted and is provided to the non-resident supplier in a timely manner.
**Steps to Follow:** - Determine the applicable TDS rate under Section 194J (10% unless reduced under DTAA). - Apply for a TDS exemption certificate if the non-resident supplier does not have a PAN. - Deduct TDS at the applicable rate and issue a TDS certificate without PAN details to the supplier.
It's advisable to consult with a tax advisor or a chartered accountant to ensure compliance with all applicable tax laws and regulations specific to your situation.
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