Subhrajit (Acc. Executive+Student) (53 Points)
15 November 2012The company in India paying allowance in INR ( agreement is in terms of USD ) to Foreign National when they visit India to provide consultancy service to the company. Whether TDS should be deducted on such payment ???
Info : 1. The company is registered in India as a foreign company ( a division of the foreign company )
2. The payee ( the foreign national ) is a staff of the the foreign company. His salary is being paid by the Foreign company.
3. The payee is a non resident in India
Section 195 of income tax act talks about the tax to be deducted at source on payments being made to non residents. It reads as follows:
“Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries" ) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force”
The rates are to be decided in accordance with the provisions of DTAA. The rates as per Income tax act or as per DTAA; whichever is beneficial to the assessee shall prevail.
Thanks.
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7024 Points)
Replied 16 November 2012
Subhrajit,
Please confirm whether the entity in India is a Branch/Liasion Office of Foreign Company or a Indian company incorporated in India.
Anuj
CAclubindia
