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TDS on export sales dtaa/pan no dtaa/pan/

ramesh (b) (25 Points)

04 November 2011

Dear all experts

My query is for the period from April 1st 2011.

I want clarification on TDS applicable rate and PAN requirement on Export sales commission paid in foreign currency in india to overseas agent.

What will be answer of above if DTAA is applicable and if not applicable.

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2 Replies

Arihanth Jain (Chartered Accountant) (1226 Points)
Replied 04 November 2011

Such commission income normally should not be taxable in India in absense of any permanent establishment (DTAA) or business connection (IT Act) in India for the NR.

Gaurav Khatter (Chartered Accountant) (58 Points)
Replied 04 November 2011

Income to a non-resident is taxable in India if satisfy the following conditions:

If Income is received (or deemed to be received) in India during the previous year and at the same time it accrues (or arises or is deemed to accrue or arise) in India during the previous year.
If Income is received (or deemed to be received) in India during the previous year but does not accrue (or arise) during the previous year.
If income is received outside India during the previous Year but it accrues (or arise or is deemed to accrue or arise) in India during the previous year.

Whether Commission Income of non-resident agents who are operating outside India is satisfying any condition given above?

As Exporter paid commission in foreign currency to agents directly outside India so income is neither received in India nor deemed to received in India.
Secondly if non-resident agent doesn’t have any permanent establishment or permanent place in India then commission income neither arise in India nor deemed to accrue or arise in India.

With above discussion if the following conditions are satisfied the commission paid to non-resident is not taxable in India:-

Agent should be non-resident.
Agent should operate its business activities outside India.
Commission paid should be related to services provided outside India.
Agent should not have any permanent establishment or permanent business place in India.
Commission remitted to agent directly outside India.

According to me TDS provsions would not be applicable on payment of commission to overseas agents. Please revert.