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DTAA verry verry urgent

CA. Dhirendra Singh (Chartered Accountant) (153 Points)

23 November 2007

Dear all,

I have U K based consultant and I received technical services from him on time to time basis in india .

Qs. What type of deduction we made at the time of payment ?

Qs. What is DTAA? Can DTAAapplicable on these transaction ?

Qs. Can TDS applicable on these transaction ?

Dhirendra Singh

Manager- Accounts

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3 Replies

(Guest)

DTAA is Double Taxation Avoidance Agreement, if u want to make apayment outside india then u need to see whether is there any agreement with the other country(U.K),& TDS should be deducted as per Sec 195(Payments made outside india)& the agreement you can see on the INCOME TAX official Website

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CA. Dhirendra Singh (Chartered Accountant) (153 Points)
Replied 23 November 2007

Thanks Tousif, In agremment , any payment make for technical services in UK ,the tax shall not exceed 20% of the gross amount. Qs. The total deduction will be 20% or somthing else. ?

CA E.A.Ravikumar ( ) (325 Points)
Replied 14 August 2008

In simple words, what we call as TDS for transactions within India, we call it as with holding tax for cross border transactions.

If you want to make payment outside India, then based on the nature of payment withholding tax (TDS) has to be deducted at prescribed rates.

If the rate is say 15%, then you have to deduct 15% from the payments.

If it is agreed that the payment for technical service will be net of tax, then you have to gross up the payment by the with holding tax rate and pay your consultant & the government.

You have to get a certificate from CA certifying that TDS has been made and remitted along with declaration for forex remittance. Your banker will help you with the formats

Your " In agremment , any payment make for technical services in UK ,the tax shall not exceed 20% of the gross amount" is not clear, elaborate