Applicability of Higher TDS @ 20%

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Rachit (Querist)
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02 April 2010 Wef 01-04-2010, Higher TDS @ 20% becomes applicable in the event the deductee is unable to provide PAN.

Whether this revised provision is even applicable to Non-residents, as in most cases they do not hold an Indian PAN number and who would be having just one-off transaction with the Indian parties.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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02 April 2010 IN CASE OFNON RESIDENT TDS TO BE DEUCTED U/S 195 @ 30.9%

Rachit

Rachit (Querist)
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02 April 2010 payments by residents to non-residents in the nature of royalties or fees for technical services attract withholding tax at rate of 10.56% u/s.195 of the Income Tax Act or at 10% under certain tax treaties in the absence of a permanent establishment or a fixed place of work in India.

Shyam Lal Naik

Shyam Lal Naik (Expert)
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02 April 2010 The provisions of DTAA overrides the Income Tax Act, in case of inconsistency. In such a situation, the applicability of higher rate is not attracted.

In othe case normal rate/20% which ever is higher.

Rachit

Rachit (Querist)
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02 April 2010 Shri. Naik,
Thanks for your reply.
One clarification is solicited from you.

CBDT press release dt 20/01/10 No. 402/92/2006-MC(04 of 2010) states that transactions with non- residents are also covered for this higher TDS rate.

In order to rely on DTAA whether it is mandatory to obtain the No PE declaration and Tax Residency certificate of the foreign party or can we apply the DTAA rates without these documents?

Shyam Lal Naik

Shyam Lal Naik (Expert)
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02 April 2010 Sir,

In the absence of expertise on the issue at hand, I beg to refrain from expressing any opinion.

Meanwhile, I request experts to favour with reasoned answer/view.

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