TDS U/S 195

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Querist : Anonymous

Querist : Anonymous (Querist)

20 April 2010 HOW WILL WE DEDUCT TDS IN THE CASE OF NON RESIDENT WHO DOES NOT HAVE PAN.
HOW THE GROSSING UP IN THE CASE WHERE WE HAVE TO FULL AMOUNT TO NON RESIDENT. THAT IS WE HAVE TO BEAR THE TDS.
WHAT ABOUT TAKING PAN AS REPRESENTATIVE ASSESSEE SO THAT WE CAN AVOID 20% TDS

Querist : Anonymous

Querist : Anonymous (Querist)

20 April 2010 WE HAVE TO PAY FULL AMOUNT OF TECHNICAL SERVICE TO NON RESIDENT. HOW THD TDS TREATMENT IN THAT CASE?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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20 April 2010 DEDUCT TDS U/S 195 @ 30.9%

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taxindiaconnect

taxindiaconnect (Expert)
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20 April 2010 Section 195 of the Act casts an obligation on a resident tax payer making payment to a non resident in respect of an income taxable in India to withhold tax at the rates applicable. The tax is not required to be deducted from the payments made outside India to a NR if the income of NR is not taxable in India. The income of the NR is taxable in India if it satisfies certain conditions.

As per section 5 the income of NR should have been either be received or deemed to be received in India or should be accrue or deemed to accrue in India for such income to be taxable in India.

As per section 9 the income of a resident by way of fees for service rendered would be treated as technical fees and will be deemed to accrue and arise in India, the income will be taxable in India with in the meaning of deeming provision under section 9 of the Act as the explanation 2 to section 9 (1) (vii)

However As per section 90 of IT Act one can take the benefit of provision of Double taxation Avoidance Agreements ( DTAA) Currently India has DTAA’s with more then 75 Countries.

Since in your query it is not clear that what is the country of residence of non resident company also not clearly mentioned, in the absence of such information it is difficult to give any concrete advice, however from the language body of the query it seems that apparently TDS is applicable under section 195 @ 10% if PAN is available. If not PAN the tax rate would be 20%.