C.A Final
38 Points
Joined November 2012
Section 195 of the Income-tax Act, 1961 mandates deduction of income-tax from payments made or credit given to non-residents at the rates in force. The person making the remittance to a non-resident needs to furnish an undertaking (in Form 15CA) accompanied by a Chartered Accountants Certificate in Form 15CB. The purpose of the undertaking and the certificate is to collect taxes at the stage when the remittance is made as it may not be possible to recover the tax at a later stage from non-residents.
in simple words you shoud have to deduct tds on foreign remittance if foreign com. have pan and covered under DTAA (double taxatation avoidance agrement) then deducted tds as per DTAA rule otherwise deduct at Rate applicable in your case .
further if foreign company hav'nt PAN No. then rate 20% becouse sec 206AA overrule whole tds sec.