Our company(Indian Entity) is paying Monthly Management/corporate charges to our parent company (Foreign Entity). As our parent company don’t have PAN No. please suggest us do we need to deduct withholding Tax @ 20% (as per DTAA) or 21.012% as per (Sec 195). There are differences of opinions regarding the same b/w our Internal & External auditors. So kindly provide your valuable suggestions on the same.
“(1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereafter referred to as deductor), failing which tax shall be deducted at the higher of the following rates, namely :
(i) at the rate specified in the relevant provision of this Act; or
(ii) at the rate or rates in force; or
(iii) at the rate of 20%.”
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Just a small suggestion that you also look into the nature of transaction/treaty. Some of such payments made are not be liable to TDS as per DTAA. Howvever S 206AA will mandate TDS. In that case just apply for a PAN & remit money without TDS.
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