Is Commission on export sales to a NRI subject to TDS? if yes, under what section and what is the percentage
CA Anurag Garg
(Chartered Accountant)
(339 Points)
Replied 18 September 2009
194H @ 10% if payment exceeds Rs. 2500 p.a.
Sunil
(Trader)
(2611 Points)
Replied 18 September 2009
Read Circular 786 of Year 2000. It is excluded from Section 195 only upon satisfaction of certain conditions:-
1) The Payment should be made to the Non Resident Directly abroad.
2) It should be against his business abroad and not deemed to accrue in India.
3) The commission should be just against your sales on principal to principal basis to the buyer against contracts negotiated by you with the buyer. If he gives you any services deemed technical or managerial service for which you remit to him income, then under section 195 you have to deduct 20% or a lower rate if specified in the DTAA with the agent's country, whichever beneficial to the non resident.
The NRI should not have a PE in India during the year. He should not have any activity fetching him business income in India. You will have to make a proper agreement indicating this situation.
You have to pay service tax and then claim refund from the department for such payments tothe NRI as a recepient of the service from abroad.
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