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Withholding tax rate if having pe in india (Income Tax)

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This query is : Resolved


( Author )
09 May 2012

The reply in the below mentioned query would be appreciated :

the query is as under

A company registered in Russia and doing some geological survey work for a company registered in India.

The Indian company mentioning that if the Russian company is having PE in India than Withholding tax would be deducted at 40% and if there is no PE in India of Russian company than the rate of withholding tax would be 10%.

Is this possible???

Kindly give the relevant extracts of statues


Vishal D Shah

( Expert )
10 May 2012

It s correct that if there is Pe rate would be 40%. Also such Pe needs to file their income tax return in India.


CA Mayank Chopra

( Expert )
11 May 2012

Dear Nitesh

1) Any project office in india whose tenure exceeds 180 days is termed as PE & in that case one has to deduct withholding tax which is normally the maximum rate of tax i.e. 40%.

2) If it is not a PE the we have to deduct withholding tax @ 10% - which is known as FTS (Fee for technical services).

3) Further PE has to file the income tax return & get his accounts audited u/s 44AB (if applicable).

4) Do refer DTAA with Russia :
go to link :
http://law.incometaxindia.gov.in/DIT/File_opener.aspx?fn=http://law.incometaxindia.gov.in/Directtaxlaws/cbdt/dta/A1_Russia.htm


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