TDS, Service tax and applicability of form 15CA and form 15C

This query is : Resolved

yogesh vijaykumar shah (Querist)
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22 July 2010
Private Limited is making the payment of sales commission to the person (resident of Nepal) who is non resident individual as per residential status. Whether TDS is 20% is to be deducted on grosssing up basis as there is no PAN.
Also let us know whether service tax is to be paid on reverse charge basis under ' Business Auxiliary Service" by the company.
Payment of sales commission shall be paid in Indian Rs. i.e. INR to the said non resident individual, whether form 15CA and form 15CB is to be submitted to RBI through bank.

Pls advise me

CA Mandar Dixit

CA Mandar Dixit (Expert)
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22 July 2010 If the sales commission is in the nature of export commission, then the same is not taxable in India as the services are rendered outside India. (CIT vs. Toshuku Ltd 125 ITR 525 SC). Section 206AA will not be applicable when there is no TDS obligation or tax is not deductible on the payment being made.
Yes, service tax will have to be apid on the sales commission under business auxiliary services. The same will have to be paid by the service recepient under the reverse charge mechanism as it will be characterised as import of services.
The submission of 15CB/CA and compliance with section 195 is obligatory when any payment is made to non-resident. The currency is not relevant in this context.
Hope above clarifies.