Bangladesh withholding tax


Querist : Anonymous (Querist) 31 October 2012


We have availed some professional services from an company in Bangladesh. Since the company does not have PAN number, we deducted 20.6% as taxes. However, the company says that this deduction is incorrect. his email is reproduced as below:

"How come you are withholding 20.6 % as income tax. Why it should be ? Because, in Bangladesh ,the banks automatically are deducting 25 % from the remitted money as 15 % as Income tax and 10 % as service tax (consultancy) from us and they forward the certificate to us and the concerned tax zone.

So thereby, you cannot deduct income tax from our billed amount. Please find the copy of our company tax certificate, you can check online about the payment and deduction of taxes by bank in Bangladesh.(for which we are responsible) . You may require to deposit the copy of our tax certificate to avoid the same.

As contractor of xxx India(names hidden), yyyy India, zzz India, we never paid this sort of tax at source. It is supposed to pay this tax for the government of India. We are working for them for last 08 years."

Please clarify if our stand of deducting TDS was incorrect under DTAA. If so, please suggest the reason for the same.

Querist : Anonymous (Querist) 21 November 2012

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