Dtaa between india and china

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PIYUSH AGARWAL (Querist)
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11 April 2014 we are a manufacturing company of electrical goods in India. we have send some electrical samples for testing to china. testing is done by china company in china only. after testing they send report to India along with their bill. now my query is whether we should deduct TDS while making payment to them? At what rte 10% or 10.3%.?
should china company should have Indian PAN or their own country PAN?
If they dont mentioned their PAN in the bill then rate should be 20.6%??
how will i come to know what is their PAN?
China company donot have any branch in India. Nor our company have branch in India. Please explain me as i am new in this. What are the things that i should look when we are doing DTAA.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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11 April 2014 you need to look for those articles in DTAA which specifies about this transaction...if this is not mentioned then normal provision of is applicable.

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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11 April 2014 first check whether the income is chargeable to tax in India under India-China DTAA. broadly it should get covered under article 7. you need to ensure that it doesnt get covered under article 12.

if it is taxable in China, you can argue that PAN is not required at all (though this position is debatable).

if the income is taxable in India, Indian PAN shall be required.

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PIYUSH AGARWAL

PIYUSH AGARWAL (Querist)
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11 April 2014 ARTICLE 7 : Business profits - 1. The profits of an enterprise of a Contracting State shall be taxable only in that Contracting State unless the enterprise carries business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other Contracting State but only so much of them as is directly or indirectly attributable to that permanent establishment.
what does this line means??? India enterprise is a contracting state? china have no branch in india neither we have any branch in china. can u explain me in easy language.How wil i prove that it is taxable only in china??

Nikhil Kaushik

Nikhil Kaushik (Expert)
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11 April 2014 Piyush,

that is what you need to work on. read the case laws on PE. apply them to facts of your case.

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