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TDS on foreign payment

kumar vivek (CA) (190 Points)

27 October 2009

in case of foreign payment to an individual, will the tds rate be increased by education cess or it will be the flat rate

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7 Replies

santhosh (CA) (636 Points)
Replied 27 October 2009

What is the amount paid and what is the nature of payment

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kumar vivek (CA) (190 Points)
Replied 27 October 2009

amount is $15000 and paid for professional services (management consultancy)

santhosh (CA) (636 Points)
Replied 27 October 2009

TDS under section 194 J is 10% Plus 3% Cess

CA. Shwetank Vats (Chartered Accountant) (653 Points)
Replied 27 October 2009

Cess @ 3% to be included in TDS on foreign payment

Sandeep Pandey (CA FINAL) (1306 Points)
Replied 27 October 2009

Cess should be included. If we transacting more than 10 Lakhs in P.Y. 2008 - 2009. Then Surcharge is also applicable.....................

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Dilip (Working) (408 Points)
Replied 28 October 2009

TDS rate needs to be increased with education cess and not with surcharge as it is payment to individual. so effective rate = basic rate + education cess.

Sunil (Trader) (2611 Points)
Replied 29 October 2009

TDS for Included Personal and Professional Services like Management Consaltancy is 20% + Edu Cess (20.6%) as per section 195 of Income Tax Act. This is irrespective of the fact whether the Non resident has a PE in India or not. If you wish to bear the tax from your own pocket you will have to deposit 25.75% including the cess. If the DTAA between the other contracting state and India specifies a lower rate for this service, then you may use whichever rate is beneficial to the payee. He will get the tax relief in the tax that he pays in his country. You have to also pay Service Tax at 10.3% of Invoice amount on Reverse Charge Mechanism. No exemption is available on this. If you bear the TDS from your pocket, you pay the Service Tax on amount of bill increased by TDS.