Dtaa related query

TDS 967 views 6 replies

Mayank Kapoor

159 Points Joined September 2009

My client ( Company) has an agreement with a company in USA whereby it is acting as a Principal Agent.

The agreement states certain payments to be made by my client to the company in USA every month . I am confused regarding some categories. Please let me know the category and the percentage of TDS to be deducted as per the DTAA between India and USA.

1.) Licence Fees

2.) Payment made on signing the agreement (No nature of payment is mentioned)

3.)Royalty :- Whether the rate will be 20 and 15 % or 10% ( The company in USA manufactures clothes, my client will be spending money on establishment of brands, development of stores, developing new designs in India)

4.)Commission

5.) Web usage :- Amount to be paid to an Indian Company as it created the Global website.

6.) ERP Usage and installation fees

7.)Minimum Guarantee Fees.

My client is handling the entire business in India on behalf of the foreign company.

I would appreciate any kind of help.

An early reply would be appreciated.

Thanks in advance.

Regards

Mayank kapoor

09871009350

Replies (6)

CA. Anuj Gupta

Practices in NRI Int.Tax FEMA TP FD

7024 Points Joined May 2007

It shall require thorough investigation of the agreement before coming to any conclusion.

Anuj

+91-9810106211

Vineet Goyal

Assistant Manager - Finance & Accounts

702 Points Joined January 2011

I agree with Anuj. It requires thorough reading of agreement else we can reach to wrong conclusion. If you just want to know DTAA rates, you can refer to Direct Tax ready reckoner.

Mayank Kapoor

159 Points Joined September 2009

I can try to summarise the agreement if it may help.

My client will be representing an US based company in India. It has been allocated some amount to open two showrooms in India , make new designs and promote the brand.

To represent the company, my client makes the follwing monthly payments to the US company :-

1) Royalty

2)Commission

3) Licence Fees

4)ERP Usage Fees

5) Minimum Guarantee Fees.

The issues I require clarity are these:-

1.) Will Commission be liable to TDS?

2) Will licence fees be treated as royalty ?

3.) What will be the category of Minimum Guarantee Fees ?

I hope it may help. I read the DTAA also but I cannot come to a conclusion until i am clear about the above issues.