Tds

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Imran H Mansuri (Querist)
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10 May 2013 Trust in india running a school who has collaboration with foreign education board....
now while making payment to that foreign board trust is liable to deduct TDS ????
if yes than under which section ?????
trust is making payment for providing student registration and conducting exams in india.....

Deepak Agrawal

Deepak Agrawal (Expert)
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10 May 2013 Registration fees paid to any person is not liable for TDS/withholding tax in India.

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Imran H Mansuri

Imran H Mansuri (Querist)
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10 May 2013 sir, but what about the income they are generating from india???
It means any income earned by education board is exempt as per income tax so it should be exempt for Non resident also...

Imran H Mansuri

Imran H Mansuri (Querist)
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10 May 2013 ........................................................................................................

Deepak Agrawal

Deepak Agrawal (Expert)
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10 May 2013 Yes. If any income is not chargeable under the Act, practically applies for everyone whether resident or non-resident unless otherwise provided.

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Imran H Mansuri

Imran H Mansuri (Querist)
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10 May 2013 ok sir thank you so very much

Guest

Guest (Expert)

10 May 2013 Thanks Deepak, you also solved my problem on the same topic.

But, just one thing annoying me, registration fees paid by the trust is an expenditure for the trust, which is taken into account while applying section 11.

Now the question, is section 40 a is also applicable to the trust.

Please through some light on it. My question may be wrong?

Deepak Agrawal

Deepak Agrawal (Expert)
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10 May 2013 Section 40a(i) applies/disallows the expenses for tds default if there is income from business & profession.

Since Trust do not offer any income under the head "Income from business & profession". Thus no question of dis allowance u/s. 40a(i)/(ia) arise at all.

However, wherever trust is liable to deduct the tds and do not comply with the tds provisions, it may be an assessee in default and accordingly, interest and penalty can be applied.

Guest

Guest (Expert)

11 May 2013 But the trust whose is also engaged in any business as an incidental activity will be liable to deduct TDS?
One more query, can the expenditure allowed to trust to claim exemption can be disallowed for non deduction/payment of TDS.

Imran H Mansuri

Imran H Mansuri (Querist)
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11 May 2013 trust is not allowed to do any incidental activity other than specified in trust deed...
Deepak sir am i right?

Deepak Agrawal

Deepak Agrawal (Expert)
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11 May 2013 Imran you r right..trust can not carry on business activity for profits. So no income can be offered under the head "profit or gains from business & profession."

Ashish, Even trusts are never discharged from the liability to deduct tds on any such payments which are liable to tds under the act or dtaa, as the case may be.

However, as no income from business arises, the disallowance of exp u/s. 40(a)(i)/(ia) does not arise at all because their whole income is exempted anyhow. But non-compliance with the tds provision may cause for penalty/interest etc. Moreover, if the default is significant, the TDS officer or AO may recommend to the CIT/higher authority to cancel the registration/non taxable status of trust.

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CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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15 May 2013 Here the moot question that needs to be examined is that whether the income arising to foreign education board is not taxable in India based on the provisions of Income Tax Act or DTAA.

Based on the limited information provided, it is very risky to say that income of foreign board is not taxable under Indian Income Tax Act.

However depending on the DTAA involved , it can be said that income of foreign education board is not taxable in India.For the same NO PE Certificate and TRC from Foreign Govt. needs to be obtained.

Anuj
femaquery@gmail.com

Deepak Agrawal

Deepak Agrawal (Expert)
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16 May 2013 Thanks Anuj Sir. Yes, Non-PE certificate and Tax Residency Certificate(TRC)u/s.90(4)of the Act is a mandatory requirement if beneficial provision of DTAA is applied.