Deduction of tds

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Vipin Sharma (Querist)
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01 December 2014 Dear All,

We have to sell Networker Licenses to our customer for their multiple locations, Please suggest what is the percentage at which TDS is deducted when we do a transaction with the these locations:

Miami
Philippines
New York
Amex
Olomouc
Cebu

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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01 December 2014 tds u/s 195 is applicable in ur case.

Vipin Sharma

Vipin Sharma (Querist)
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01 December 2014 Tushar, That I know Section 195 is applicable, but i want to know that what is the percentage at which the customer will deduct the TDS.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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20 July 2024 The deduction of TDS (Tax Deducted at Source) in India depends on various factors, including the nature of the payment, the recipient's tax residency status, and the applicable Double Taxation Avoidance Agreement (DTAA) between India and the recipient country. Here’s a general guideline:

### TDS Applicability

1. **Recipient's Location:**
- **Miami, New York (USA):** For payments made to entities in the USA, TDS rates are generally specified under the DTAA between India and the USA. Typically, the rate for royalties or technical services is around 10-15%, depending on specific conditions.

- **Philippines:** For payments to the Philippines, TDS rates are also subject to the DTAA between India and the Philippines. The rate for royalties or technical services is typically around 10-15%.

- **Amex (Assuming American Express):** Payments to entities in the USA (like American Express) would follow the TDS rates specified under the India-USA DTAA.

- **Olomouc (Czech Republic), Cebu (Philippines):** Similar to the Philippines, payments to the Czech Republic or Cebu (a city in the Philippines) would follow the respective DTAA rates.

2. **Nature of Payment:**
- If you are selling Networker Licenses, this could potentially fall under the category of royalty or fees for technical services, depending on the specifics of the license agreement.

3. **DTAA Rates:**
- It’s crucial to refer to the DTAA between India and each country to determine the applicable TDS rates. These rates can vary, so specific details from the DTAA need to be consulted.

### Practical Steps:

- **Consult DTAA:** Review the relevant DTAA for each country (USA, Philippines, Czech Republic) to determine the exact TDS rates applicable to payments for royalties or technical services.

- **Tax Consultant:** Engage a tax consultant or chartered accountant familiar with international taxation to ensure compliance with Indian TDS regulations and the specific provisions of DTAA.

- **Documentation:** Maintain proper documentation of payments, DTAA application, and TDS deductions made to ensure compliance during audits or assessments.

### Summary

The percentage of TDS deducted depends on the recipient's country, the nature of the payment (royalty or technical services), and the rates specified under the applicable DTAA. It’s essential to review the DTAA between India and each country to accurately determine the TDS rates applicable in each case.

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