TDS Technical fees pai o Foreign Co.
This query is : Open
26 May 2009
I just want to ask if I am paying Technical Assistance fees to Some XYZ Co.having their H.O.(based) in Japan then do I have to deuct TDS ? If yes then what will be the perentage and under what section I have to deduct and how to file TDS return for that?
26 May 2009
Section 195 of the Act casts an obligation on an resident tax payer making payment to a non resident in respect of an income taxable in India to withhold tax at the rates applicable.
Since as per section 9 the income of a resident by way of fees for technical fees will be deemed to accrue and arise in India, the income will be taxable in India.
Section 115 A of Income Tax Act provide a concessional rate of tax @ 10% on non resident earning income by way of royalty in India pursuant to a contract entered on or after 1st June 2005. Need not mention that the rate of tax also needs to be enhanced by the amount of applicable surcharge and the cess.
However As per section 90 of IT Act one can take the benefit of provision of Double taxation Avoidance Agreements ( DTAA) on the payment of royalty if the recipient of the income from technical fees is a resident of a country with whom India has a DTAA. Currently India has DTAA’s with more then 75 Countries. India has a DTAA with Japan and as per Japan article 12 of that treaty the tax rate is 10 %. On this no SC and EC is applied. Thus for the purpose of your query the rate of tax would be 10%.
You need to file a return of TDS for this and also to issue a TDS certificate.
Since as per section 9 the income of a resident by way of fees for technical fees will be deemed to accrue and arise in India, the income will be taxable in India.
Section 115 A of Income Tax Act provide a concessional rate of tax @ 10% on non resident earning income by way of royalty in India pursuant to a contract entered on or after 1st June 2005. Need not mention that the rate of tax also needs to be enhanced by the amount of applicable surcharge and the cess.
However As per section 90 of IT Act one can take the benefit of provision of Double taxation Avoidance Agreements ( DTAA) on the payment of royalty if the recipient of the income from technical fees is a resident of a country with whom India has a DTAA. Currently India has DTAA’s with more then 75 Countries. India has a DTAA with Japan and as per Japan article 12 of that treaty the tax rate is 10 %. On this no SC and EC is applied. Thus for the purpose of your query the rate of tax would be 10%.
You need to file a return of TDS for this and also to issue a TDS certificate.
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29 May 2009
Dear Rajesh thanks for your reply.My another doubt was that if that foreign co. holds PAN of India then also do we have to deduct the TDS under section 195 only ?
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