26 June 2013
I request you to please solve the following query:
-A company wants to make a payment to VIETNAM for booking of exhibition stall in VIETNAM.
-The Vietnamese company (VC) does not have any permanent establishment in INDIA therefore nor do they have a PAN.
-VC is not providing any Tax Residency Certificate.
-VC is not ready to bear the TDS.
QUESTIONS: 1)Whether TDS u/s 195 is to be deducted?
2)If yes, then under which head? Fees for technical services?
3)If it is fees for technical services, then, The rate of TDS as per DTAA with Vietnam is 10% for fees for technical services. But as TRC is not there, DTAA will not be applicable. The rate of TDS u/s 115A(1)(b) is 25% + cess As PAN is not there, as per Section 206AA, 20% + cess is to be deducted. What is the rate applicable from above?
4) Some have argued that as the Income does not accrue or arise in India, it is not taxable and hence no DTAA is to be deducted. Is this true in this case?
27 June 2013
Rate of TDS is 10 % in case of DTAA and 20 % + cess if no PAN. and 25 % + cess as per Income tax Act. IN case of DTAA , no surcharge and cess to be added. You can benefit the client by consultation through two ways: 1) prove that the professional charges are not in the nature of fees for included services and not in the nature of 'make available' , then no Tds to be deducted. 2) In this case, permanent establishment is not to be seen. 3) if other person is not ready to bear the TDS, then grossing up is to be done. Now there are some judgement through which we can benefit the client while grossing up. You shall find proper information on net. If you need further guidance, you can drop a mail at mehul@raseshca.com Regards CA Mehul Shah 9723459572 Consultant on International taxation
27 June 2013
Rate of TDS is 10 % in case of DTAA and 20 % + cess if no PAN. and 25 % + cess as per Income tax Act. IN case of DTAA , no surcharge and cess to be added. You can benefit the client by consultation through two ways: 1) prove that the professional charges are not in the nature of fees for included services and not in the nature of 'make available' , then no Tds to be deducted. 2) In this case, permanent establishment is not to be seen. 3) if other person is not ready to bear the TDS, then grossing up is to be done. Now there are some judgement through which we can benefit the client while grossing up. You shall find proper information on net. If you need further guidance, you can drop a mail at mehul@raseshca.com Regards CA Mehul Shah 9723459572 Consultant on International taxation
But the solution to the above and the final decision which i took, was that as the Income does not accrue or arise in India, no TDS is to be deducted. This is the final decision after going through every material and details.
CAclubindia
