An Indian company is availing software support services from US software technology company
For that Indian Company is paying $15000 as annual support charges.
Does Indian company is liable to deduct TDS for payment towards support charges
If so what is the rate ? and under what section ?
Yes, TDS is to be deducted u/s 195 as per DTAA or I.Tax which is beneficiary to supplier. If PAN not available then 20% or as per Rate whichever is higher.
Hi Sai,
If Foreign company is having PE in India, then TDS needs to be deducted under article 12 of the US DTAA agreement @ 15% provided foreign company submitted their TRC in USA and also PAN in India. Following are the implication :
1) Foreign company doesnt provided TRC of USA and PAN in India : DTAA benefit cannot availed. Therefore, TDS rate would be 25% + SC + EC (Refer enclosed sheet)
2) Foreign company doesnt provided TRC of USA but having PAN in India : DTAA benefit cannot availed. Therefore, TDS rate would be 25% + Surcharge + Edu. Cess (Refer enclosed sheet)
3) Foreign company provided TRC of USA but not having PAN in India : DTAA benefit can be availed. However due to non availability of PAN, TDS rate would be 20% + Surcharge + Edu. Cess
4) Foreign company provided TRC of USA and also having PAN in India : DTAA benefit can be availed. TDS rate would be flat 15%
Please refer article 12 of the India - USA DTAA agreement for further details.
If foreign company doesnt have PE in India, No TDS applicable.
Thanks and Regards,
Manoj B. Gavali
yes...............................................
CAclubindia
