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Tds on foreign remittance

Milan Agrawal (Chartered Accountant) (207 Points)

01 June 2013

Dear Sir,

My client received a bill from a foreign company(Spain) which includes the following:

Material - 1000.00 Euro

Installation Charges - 1500.00 Euro

Total Bill Amount - 2500.00 Euro

Now, rate of TDS as per Section-195 (for Non Resident Corporate & remittance below Rs. 1 Crore) is as follows:

Fees for Technical Services - 25.75 %

Any Other Income - 41.20 %

My query is:

1. What is the best & correct method of deducting TDS?

2. Can we deduct TDS @ 25.75% on the Total Bill Amount or we have to deduct TDS @ 25.75 % on Installation Charges (being FTS) & @ 41.20 % on Material Value (being any other income) or there is any other option?

Kindly look into the matter and suggest the best available option.

Regards,

CA Milan Agrawal

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12 Replies

(Guest)

Can we deduct TDS @ 25.75% on the Total Bill Amount or we have to deduct TDS @ 25.75 % on Installation Charges (being FTS) & @ 41.20 % on Material Value (being any other income) or there is any other option?

yes u deduct TDS @ 25.75 % on Installation Charges (being FTS) & @ 41.20 % on Material Value .But in that case u have to make two different payments.one for material and one for installation charges as while issuing form 15 ca , only one rate can be mentioned.

ALSO REFER DTAA WITH SPAIN FOR MORE CLARIFICATION

h ttp://law.incometaxindia.gov.in/Directtaxlaws/cbdt/dta/A1_Spain.htm

DOUBLE TAXATION AVOIDANCE AGREEMENTS WITH 84 COUNTRIES REFER THIS LINK

https://www.chdcaprofessionals.com/2013/04/international-taxation-dtaa_11.html

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Milan Agrawal (Chartered Accountant) (207 Points)
Replied 01 June 2013

Thanx Rajiv ji,

Further, I would like to add one more point.

As per DTAA with Spain, TDS rate for FTS is 20% . However, nothing has been mentioned about Material value. So, what would be the option in this case?

Regards,

Milan Agrawal

(Guest)

Yes As per DTAA with Spain, TDS rate for FTS is 20%.so deduct at 20.06% on FTS including education cess and higher education cess.

AS REGARDS OTHER INCOME , U DEDCUT TDS AT RATES MENTIONED FOR OTHER INCOME.

ARTICLE 23 : Other income - 1. Subject to the provisions of paragraph 2, items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing Articles of this Convention, shall be taxable only in that Contracting State.

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment, or fixed base. In such a case, the provisions of Article 7 or Article 15, as the case may be, shall apply.

3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention, and arising in the other Contracting State may be taxed in that other State.

Milan Agrawal (Chartered Accountant) (207 Points)
Replied 01 June 2013

Dear Rajiv Ji,

So, as per your kind opinion, we must follow the following option:

On material value @ 41.20% ( as per Section 195)

On Installation Charges @ 20% (as per DTAA with Spain)

But then, we have 2 get 2 certificates(Form-15CB) and accordingly hv to upload 2 Form-15CA and also have to make the remitance two time, 1 for material value and another for installation value.

Regards,

Milan Agrawal

(Guest)

On material value @ 41.20% ( as per Section 195) On Installation Charges @ 20.06% (as per DTAA with Spain) then, get 2 certificates(Form-15CB) and accordingly upload 2 Form-15CA and also make the remitance two times, 1 for material value and another for installation value.

I HAVE GIVEN THIS OPINION ON THE BASIS OF FACTS.IF I WOULD DEDUCT TDS , THEN I WOULD DEDUCT AS PER ABOVE METHOD.

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suraj (officer) (31 Points)
Replied 26 October 2013

Dear sir ,

we deduct 10.3% tds as per DTAA I.e 3414.99 usd on foreign remittance on 31/05/2012 .what will be the conversion rate .

can we take conversion rate on which tds deducted or current rate on which tds deposited

(Guest)

Originally posted by : suraj
	Dear sir , we deduct 10.3% tds as per DTAA I.e 3414.99 usd on foreign remittance on 31/05/2012 .what will be the conversion rate . can we take conversion rate on which tds deducted or current rate on which tds deposited

CURRENT RATE ON WHICH TDS DEPOSITED.

shelendra kumar bisaria (chartered accountant) (23 Points)
Replied 19 March 2014

we have to remit foreign fees to obtain export order to a non resident company located at New Zealand , As declared by company representative that they have no busines establishment in India and no representative are dwelling in India . Please advice whether TDS would be deducted u/s 195 ,if yes what would be percentage. In this connection we would like to inform you that we have obtained certificate from non resident co. in this regard.

ca s.k.bisaria

sonu jaiswal (article assistant) (39 Points)
Replied 22 May 2014

pleasekindly suggest me this

Q. my client has been receiving invoicesin dollar for purchase from singapore

but now it has been receiving in indian rs.now should it deduct tds?

please advise me?

Lingesh K. (.) (72 Points)
Replied 16 December 2014

Dear Sir,

1. What is the Procedure for Subscripttion Fees (Nature of Foreign Remittance) Paid to USA Foreign Company.

2. TDS Deductable on $775 USD, If Deductable then Kindly provide Section & Rate.

3. After Uploading Form 15CA Part-1 What is the Next Procedure.

4. Form 15CB CA Certificate Required for above Procedure.

Sir, Kindly provide the procedure & details Very Urgently.

Thanks & Regards,

Lingesh K.

E-Mail ID - lingesh_786 @ yahoo.co.in

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payal (article) (23 Points)
Replied 12 December 2016

Originally posted by : Milan Agrawal
	Dear Sir, My client received a bill from a foreign company(Spain) which includes the following: Material - 1000.00 Euro Installation Charges - 1500.00 Euro Total Bill Amount - 2500.00 Euro Now, rate of TDS as per Section-195 (for Non Resident Corporate & remittance below Rs. 1 Crore) is as follows: Fees for Technical Services - 25.75 % Any Other Income - 41.20 % My query is: 1. What is the best & correct method of deducting TDS? 2. Can we deduct TDS @ 25.75% on the Total Bill Amount or we have to deduct TDS @ 25.75 % on Installation Charges (being FTS) & @ 41.20 % on Material Value (being any other income) or there is any other option? Kindly look into the matter and suggest the best available option. Regards, CA Milan Agrawal

Suman Kumar (Sr. Consultant) (23 Points)
Replied 29 December 2016

Dear Sir, Following issues are facing by me.. 1. In Telecom company we have a bilateral agreement with client as we received call from outside india (Inbound) and send call to outside india (Outbound) 2. We have the bilateral agreement with foreign partners for Inbound and Outbound. 3. Our partner's are DTAA partners, but not providing TRC and other compliance certificates, 4. So in definition of Sec 195, mentioned TDS applicable on sum chargeable to tax. 5. Here in our case Our revenue (Inbound) is always more than the Expenses (Outbound) 6. So in all Our foreign partners are not getting any income from India for which they chargeable to tax. 7. In lieu of above points, should i need to deduct tax on vendor invoices (Outbound part) or no need to deduct tax as at last there is no income in the hand of Partners. Please advise.