18 December 2009
As per recent judgement passed by Karnataka High Court in case of Samsung, person paying any sum to non resident has to deduct tax at applicable rates whether there is any income accruing to the non resident or not. The payer cannot consider whether the remittance is applicable to tax or not and cannot apply the provisions of the DTAA. The payee has to claim refunds by filing return in India. As payer, you have to deduct TDS at 30% + cess if paying to individual. If the DTAA between India and payee's country may exempt the payment on account of number of days stay in India of the payee, the payee can file a return and claim refund. This judgement is applicable for all payments including import of goods and also remittances that are not taxable to payee (example hotel stays or other payments you make while travelling abroad). In case you think you do not have to deduct or deduct less, payee can apply to assessing officer for certificate u/s 197 before receiving payment from you. If Supreme Court stays this judgment then you can apply provisions of DTAA for lower or nil rate if applicable.
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