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withholding tax

gopabandhu (service) (19 Points)

13 May 2007

At what percent withholding tax will be deducted from a UK base company who is providing service to a Public sector enterprise of India ? As India has DTAA treaty with UK. Does a PSU be a govt organisation or govt approved specified organisation from which lower percentage of tax will be deducted under DTAA treaty with UK & if so at what percentage ?

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2 Replies

krunal_love (25 Points)
Replied 18 May 2007

Dear gopabandhu , for deduction of TDS on Foreign payment Sec 195 provides that you have to make an application to A.O. for asking what % / amount to be dedcuted from the payment made to forein party. Cause TDS on foreing party applies on Income and not on payment like other normal TDS provisions.A.O. to be applied for the purpose is the one who is liable to make assesment of that forein party.

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krunal_love (25 Points)
Replied 18 May 2007

For your other question that whether PSU be a govt organisation or govt approved specified organisation , then i want you to refer to SC decision which clarifies that PSU(s) are not a govt organisation hence there employees are not govt employees. Looking to the case fact one can say that PSU can be said as govt approved secified organisation