Section 206AA overrides DTAA

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Nikhil Chhawchharia

Nikhil Chhawchharia (Querist)
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24 February 2011 Does section 206AA i.e. PAN required otherwise TDS to be deducted @ 20%, overrides DTAA.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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24 February 2011 1) Mr. S.Sairam in his article (see home page of caclubindia) observes that 206AA prevails over 90(2).
2) Mr. Venkat Rao Marella in his article (see home page of caclubidia) concludes that 206AA prevails over 90(2).
3) Dr. Vinod.K. Singhania in his article in SIRC Newsletter (July 2010 issue) says 206AA cannot override the provisions of DTAA. If a tax treaty provides a tax rate which is lower than 20 %, tax will be deducted at the lower rate,even if PAN is not furnished by the recipient.

Unless CBDT comes out with a notification/ amendment in law at the earliest, the issue will lead to prolonged litigation.

Nikhil Chhawchharia

Nikhil Chhawchharia (Querist)
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24 February 2011 Sir no offence meant, I am pleased to inform you that Section 206AA provides the following:

1) " Nothwithstanding anything containing in the ACT"

2) The rates of TDS will be higher of the following:
a) 20%
b) rates prescribed in DTAA.

So i am of the opinion that it will 206AA prevails over 90(2).

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CA Ayush Agarwal

CA Ayush Agarwal (Expert)
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15 July 2013 Section 206AA Overrides Section 90(2).
So Tax is to be Deducted @20%.

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