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Tds on non resident

Rohit Verma (CA Final) (39 Points)

26 June 2014

Dear Sir,
Please guide me on the applicability of tax on the following:
If a Indian company makes a payment in the nature of Fee for developing website/software to a Non resident in india also NRI has place of business in India.
Also note that invoice raised in INR and payment also made in INR.

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5 Replies

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 26 June 2014

Go to the section 195 of Income tax.. section 192 to 194la does not applied here...

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Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 26 June 2014

TDS deductible u/s 195 because the feee for developing software constitute fee for technical services accruing in india to NRI as the services to be used to create a source of income in india ....See Sec 9(1)(vii) of the Act.

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Amrit (Student) (26 Points)
Replied 26 June 2014

Such income is deemed to accrue or arise in india and thus taxable under section 9(1)(vii). Tds needs to be deducted at the rate of 25% but if DTAA provisions arise then at 10%.

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CA Madhvi (...Blissful...) (1658 Points)
Replied 27 June 2014

First you have to check whether it falls under the defination of fee for technical serviese or not as per section 9(1)(vii).If,so then income would be taxable and TDS would be deducted as per rate prescribed under section 195 or relavant treaty (if there is treaty with other contracting state) whichever is benificial. If such income is not FTS as per Sec 9.then it would be business income as you have mentioned it has PE in india .then.no tax would be dedcutible on such payment.

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(Guest)

Originally posted by : CA Madhvi
	First you have to check whether it falls under the defination of fee for technical serviese or not as per section 9(1)(vii).If,so then income would be taxable and TDS would be deducted as per rate prescribed under section 195 or relavant treaty (if there is treaty with other contracting state) whichever is benificial. If such income is not FTS as per Sec 9.then it would be business income as you have mentioned it has PE in india .then.no tax would be dedcutible on such payment.