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TDS ON PROFESSIONAL PAYMENTS MADE TO AUSTRALIA

Aparna (Student) (55 Points)

11 November 2009

We are making payment to a company in Australia for professional services rendered.Wether we have to deduct TDS on the same or not?If yes at what rate?

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GAURAV BEHL (CA-FINAL ) (228 Points)
Replied 11 November 2009

yes, you have to deduct tds u/s 195 @ 10.5575%.otherwise all expenditure related to it will be disallowed under income tax act1961. similar to your case we are making payments to a korean company and deducting tds @ 10.5575%

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Yupp!! I go with Gaurav

Sunil (Trader) (2611 Points)
Replied 11 November 2009

The rate of 10% + is as per Section 9 of Income Tax Act and not as per DTAA with Australia. The Australia DTAA has no provision for relief for Companies rendering Professional or technical Services. Technical Service in pursuance of Royalty Agreements only have relief. Therefore you have to follow Section 9.

Section 9 has Royalty and Technical Fees. That applies to you.

Use the rate as per Item (BB) of 10% for agreements after 1/6/2005.

Section 206AA Overides the provision of Section 195 for using the rates in force. If there is no PAN you have to use 20% TDS if rates in force are lower than 20%. The over riding of Section 206AA seems to be possible only by the DTAA. Asyou are not using DTAA you have to obtain PAN Number.

Even though you are not using DTAA, your Australian payee will get relief in their Australian Tax in terms of DTAA for the Indian Taxes Witheld.

CA. ANKUR JAIN (CA.....) (2800 Points)
Replied 11 November 2009

Originally posted by :GAURAV
"	yes, you have to deduct tds u/s 195 @ 10.5575%.otherwise all expenditure related to it will be disallowed under income tax act1961. similar to your case we are making payments to a korean company and deducting tds @ 10.5575%	"