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Dtaa query

devang (CA FINAL article ) (181 Points)

04 July 2014

hello collegues,

I have query relating to foreign payment.

we have contract with foreign university (canada) for running corse in india by our school name and we are going to pay management fees to them

my question is

1. whether TDS provision attract or not ? in which section ?

2. can we avoid TDS if apply ?

3. tax planinng

please reply as soon as possible fast

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1 Replies

Malhaar V Kale (Chartered Accountant) (86 Points)
Replied 05 July 2014

As far as my understanding is concerned, my answers is as follows.

1. whether TDS provision attract or not ? in which section ?

Yes TDS provisions will attract since the income in the hands of such foreign entity will be deemed to accrue or arise in India hence will be liable to tax

2. can we avoid TDS if apply ?
I do not think you will be able to "AVOID" TDS in this case.

3. tax planinng
If that insitiute gets Indian PAN, then TDS will be deducted at lower rates. If not then TDS will have to be deducted at maxiumx marginal rate (MMR) of tax. Also, DTAA can be referred to between Indian and Canada if that entity gets PAN. DTAA provisions will not be applicable and TDS will have to be deducted at MMR if it doesn't get PAN.