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TDS on Foreing payment

Kuldeep (Trainee ) (100 Points)

21 December 2010

Dear sir During audit of an multinational consultancy firm m confused at a point. The company has provided payment to foreign national (individual not being an indian resident) as a professional fee for taking one day seminar, payment has provided in foreign currency. now m confused whether Tds to be deducted here or not. As per Certificate provided by Chartered accountant it has been provided that tax has not to be deducted as per provisions of Sec.195 of the IT Act,1961 read with Article 14 of convention for avoidance of DTAA. M not able to crasp the given provision kindly help to deal the situation and tell me wat procedures i follow for such payments. thanks

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2 Replies

Divya K S (CA) (289 Points)
Replied 21 December 2010

Firstly check out the DTAA with that country & check out the rate as per that DTAA for professional services. The rate as per Section 195 of Income Tax Act must be looked into. The rate whichever is beneficial to the assessee (whichever is less) must be adopted.

CA ASHISH GUPTA (FCA, LL.B., MBA) (390 Points)
Replied 21 December 2010

Please refer to explaination to section 9(2) and explaination 2 to section 9(1). In case of technical service the income deemed to accrue in India, irrespective of business conection. Plz chek DTAA with the relavant country. The rates for most of the countries are 10 or 15%.