DTAA With Germany
This query is : Resolved
BISWA RANJAN JATI
(Querist)
07 September 2010
WE are remitted some monies for germany for reimbursement of travelling expenses will it attract Withholding Tax under DTAA with Germany.
08 September 2010
In case of reimbursement of expenses normally withholding tax is not applicable.I am keeping this open for further response.Also refer to the following.
• The contract / nature of the payment will determine the rate of TDS recovery. This may be as per Income tax Act or as per DTAA (Double Taxation Avoidance Agreement).First we check the applicability of DTAA. If the rate as per DTAA is more than the Income Tax Rate, then we deduct tax as per IT Rate.
a. The withholding tax rate under the ADT agreement can be determined from the web site link https://law.incometaxindia.gov.in/DIT/intWitholdingTax.aspx#. Go to the web site https://www.incometaxindia.gov.in/, select “International Taxation”,click on “Witholding Tax” followed by withholding tax rate. Else directly click on https://law.incometaxindia.gov.in/DIT/File_opener.aspx?fn=https://law.incometaxindia.gov.in/Directtaxlaws/dtrr2005/R10.htm.
b. In order to know the rate as per income tax act, one can refer the website https://www.incometaxindia.gov.in/, select “International Taxation”, click on “Non-Residents” / “Foreign Companies” whichever is applicable followed by “General and Special Rates”.
c. In order to know the clause/article under DTAA applicable, one can refer to the web site https://law.incometaxindia.gov.in/DIT/intDtaa.aspx and click on the country to which the remittance is applicable.
• The contract / nature of the payment will determine the rate of TDS recovery. This may be as per Income tax Act or as per DTAA (Double Taxation Avoidance Agreement).First we check the applicability of DTAA. If the rate as per DTAA is more than the Income Tax Rate, then we deduct tax as per IT Rate.
a. The withholding tax rate under the ADT agreement can be determined from the web site link https://law.incometaxindia.gov.in/DIT/intWitholdingTax.aspx#. Go to the web site https://www.incometaxindia.gov.in/, select “International Taxation”,click on “Witholding Tax” followed by withholding tax rate. Else directly click on https://law.incometaxindia.gov.in/DIT/File_opener.aspx?fn=https://law.incometaxindia.gov.in/Directtaxlaws/dtrr2005/R10.htm.
b. In order to know the rate as per income tax act, one can refer the website https://www.incometaxindia.gov.in/, select “International Taxation”, click on “Non-Residents” / “Foreign Companies” whichever is applicable followed by “General and Special Rates”.
c. In order to know the clause/article under DTAA applicable, one can refer to the web site https://law.incometaxindia.gov.in/DIT/intDtaa.aspx and click on the country to which the remittance is applicable.
CA. Bikash Bogi
(Expert)
12 September 2010
If the reimbursement of expences is supported by actual supportings and it is as per the agreement between the parties and separate bills has been issued for the same, then only No tax will deducted at the time of making the reimbursement.
there are many case decesion supporting this contention.
there are many case decesion supporting this contention.
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