195 - withholding tax - Act Vs Treaty

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nilesh (Querist)

10 May 2010 A domestic company wants to remit money to UK based company towards services provided by UK company for Marking survey at UK and potential of its products there. My questions are:

(a) whether the payment will fall under "fee for technical services" (FTS)?

(b) In case of treaty it is mentioned that FTS is taxatble in both country. And taxable also in the source country.

(c) Does this mean that even if UK company has provided services out of india and does not have PE in india still this amount will be liable to be tax in India?

(d) rate of tax 10.3%, or 40.4 % (considering this as payment of other sum as the agreement is not approved.

Please advice.

thanks

Nilesh

taxindiaconnect

taxindiaconnect (Expert)

11 May 2010 Interesting query indeed, I am answering in short answer to your query is as following -

(A) NO
{b) Yes
(c) Yes
(d) rate is 10% as per DTAA between India and UK.

In case of further calrificaion and detailed answer, please let mw know.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)

31 December 2010 a.)Yes as per sec 9(1)(vii).
b.)Yes.
c.)Yes after amendment to sec 9(2)of I T Act,1961.
d.)the rate shall be 10.5575%.Also the rate as per DTAA is 15%.

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