pymt to uae based consultants & tds thereon

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sushil (Querist)

29 August 2010 Dear all,
We r a pvt ltd company, we have formed a new subsidiary company in uae. for that purpose we piad $3000 @ 46.45 without deducting tds on 13.08.10 to a consultant residing in uae.
pls tell me at wt rate we should deduct tds & deposit into govt treasury by 7th sept 10.

Thanks in advance,
Sushil.

CA SMR

CA SMR (Expert)

29 August 2010 • 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.

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