15cb - tds deduction

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Keyur (Querist)
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20 February 2013 Hi,

I am remitting $1,000 to US vendor on account of marketing expenses. The US vendor is not having any PE in India and does not have PAN. The vendor has rendered services outside India

Is TDS required to be deducted. What is rate of TDS applicable to be deducted in such case.

Please advice. Your quick revert is appreciated. Thanks.

CA bhargava

CA bhargava (Expert)
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20 February 2013 TDS to be deducted is 20% on the total

Keyur

Keyur (Querist)
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20 February 2013 Can you please help me with relevant sections to look into .. along with any recent notifications or judgements or case laws.. Thanks. Appreciate your help.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 February 2013 Dear Keyur,

Kindly refer to Section 206AA for the same. the said section was amended on 1 April 2010 to the effect that any payment liable to TDS would attract 20% or higher rate (if applicable) if the payee doesn't furnish his/her/its PAN to the payer.

Since in your case the payee doesn't have a PAN. 20% rate shall apply (this is assuming that FTS was either not taxable or was taxable at beneficial rates under 20%, thus requiring deduction at 20%).

Keyur

Keyur (Querist)
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21 February 2013 Hi dear.. Thanks for the quick reply.

Under what section do I need to pay TDDS to the government.. i.e. under section 194C or 194J.. or what.

Also how will the foreign vendor avail the income tax credit..

Since he does not have PAN, what are the procedures I need to perform which will help him aval TDS credit. Do I need to issue them a TDS certificate.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 February 2013 Dear Keyur,

payments to foreign vendors is liable to TDS under Section 195.

Post amendment to 206AA, the foreign vendor is supposed to apply for PAN and file return for claiming the refund (incase the said payments were not chargeable to tax in India)

Claiming credit for the same in US tax return could be an issue as the this TDS won't be deducted as per DTAA.

Yes, you need to issue the TDS certificate.

so the procedure should be as follows:

1. First ask the vendor to apply for PAN.

2. Once this is done, you may also be able to get a Nil withhholding certificate from a CA (Form 15CA/CB).

If the above is done, no further complication of filing the return may occur (as I said "MAY". It is possible that despite taking PAN and getting a Nil withholding 15CA/CB, AO may issue a notice to the vendor for non-filing of return)

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Keyur

Keyur (Querist)
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21 February 2013 Nikhil, can I get your mobile no.. thanks again.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 February 2013 you can call me at +91 - 9699814106 email: ca.nikhilkaushik@gmail.com

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