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TDS on remittance in Bhutan

Sujit Talukder (service) (719 Points)

30 June 2009

A company from India is required to make payments for consultancy services to a person in Bhutan. The service will be given the person in Bhutan and will be utilized in Bhutan. The consultancy service will be for a project in Bhutan. The amount will be paid in Indian Rupees as retainership fees.

Now my query is:

Whether there is any TDS liability for the payment? If yes, under which section and the rate of TDS?
Whether payment made in Indian Rupees amounts to foreign remittance? Will new Form 15CA and 15CB are required for this purpose?

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5 Replies

(Guest)

Hi Sujit,

You need to collect TDS u/s 195. TDS to be deducted as per 194C(rate 2%) or 194J(rate 10%) as per the transaction you entered with the Non resident..

As per FEMA transaction made in INR with non resident from Bhutan is not foreign remittance. Yes Form 15CA & 15CB will need to be filled up before making remittance. You can also check the Notification No 30/2009 dated March 25, 2009.

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Sujit Talukder (service) (719 Points)
Replied 30 June 2009

Hi Tinku,

If there is TDS liability u/s 195, how swction 194 C or 194J will come?

If this is not a foreign remittance, whehter information to RBI is required to be submitted?

(Guest)

well Sujit sec 195 covers payment to non resident but rate of TDS to be collected shall be as per sec 194C/J as applicable.

For the 2nd part I think no need to submitt info to RBI as we are not dealing with Forex.

Sujit Talukder (service) (719 Points)
Replied 30 June 2009

When Section 195 itself provides the TDS rates, why the Sections 194C or J will apply?

If the payment is covered under sec 195, TDS has to be deducted u/s 195 or DTAA rate.

So far my view is that as the services are rendered outside India and utilised outside India, there is no liability of TDS.

My view is based on Section 9(1)(vii)(b).

REgarding the 2nd part answer, if no information is required to be submitted to RBI, how can we file new 15CA/Cb. Please refer Circular 04/2009 dated June 29, 2009.