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TDS rate commission to non resident hotel room booking agent

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(Querist)
02 July 2009 AA LTD IS RUNNING A HOTEL IN INDIA AND HAVE A CONTRACT WITH AN AGENT IN USA TO BOOK THE ROOMS FOR THEIR CLIENTS IN INDIA.

FOR THE SAME THE USA AGENT WILL GET AN A 5% COMMISSION ON THE BILLING AMOUNT FROM THE HOTEL.

WHETHER THE TDS WILL APPLY? IF SO WHAT RATE?
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CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
02 July 2009 TDS is applicable. Refer to DTAA agreeemnt with usa and apply the rate of tds as per DTAA. If DTAA is silent about the rate for commission then section 195 will be appplicable.
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CA Nitin Wadhwani

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CA Nitin Wadhwani (Expert)
03 July 2009 In my opinion, TDS is not applicable.
Further I would like Mr.Rajesh Dua to opine on this issue.
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