Section 194J
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
02 July 2010
There is a fine line distinguishing professional services and technical services
The definition of technical services in section 9(1)(vii) covers rendering of any service of a managerial, technical or consultancy nature.
In this respect any service could be caught for tax (as it could be deemed to be managerial or technical or of a consultancy nature)
In 194J professional services includes technical consultancy.
Are there any case laws that have dealt with this distinction ?
I am faced with a predicament that under the Singapore DTAA payment for technical services are taxable at 10% whereas business income is not taxerd in the paying state (if there is no PE)
My client is a market research company based in Singapore (and that is its only line of business) which renders research services to an Indian company, which insists on treating the fee payable (from India) as one for technical services (and withholding tax at 10%) and not as (the Singapore company's) business income (for which the tax would be NIL)
Please advise
The definition of technical services in section 9(1)(vii) covers rendering of any service of a managerial, technical or consultancy nature.
In this respect any service could be caught for tax (as it could be deemed to be managerial or technical or of a consultancy nature)
In 194J professional services includes technical consultancy.
Are there any case laws that have dealt with this distinction ?
I am faced with a predicament that under the Singapore DTAA payment for technical services are taxable at 10% whereas business income is not taxerd in the paying state (if there is no PE)
My client is a market research company based in Singapore (and that is its only line of business) which renders research services to an Indian company, which insists on treating the fee payable (from India) as one for technical services (and withholding tax at 10%) and not as (the Singapore company's) business income (for which the tax would be NIL)
Please advise
CA Chitresh Gupta
(Expert)
02 July 2010
In our opinion ist you need to determine the status of foreign company in INdia i.e. whether they have PE or business connection in India.
If they have PE then INcome attributable to Indian operations will be become taxable in Indian and you need to deduct tax as per section 195.
If they do not have PE and the income you are paying falls under technical services the TDS may be deducted at 10%.
But you should also consider section 206AA which require deduction of tax @ 20% in case PAN is not available.
Regards
If they have PE then INcome attributable to Indian operations will be become taxable in Indian and you need to deduct tax as per section 195.
If they do not have PE and the income you are paying falls under technical services the TDS may be deducted at 10%.
But you should also consider section 206AA which require deduction of tax @ 20% in case PAN is not available.
Regards
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