TAX DEDUCTION FROM RENT PAID TO SWEEDEN

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KETAN Y SHETH (Querist)
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04 October 2008 MY CLIENT HAS TAKEN PLANT ON RENT FROM SWEEDEN. AS PER RENT AGREEMENT, PAYMENT IS REQUIRED TO MADE EVERYMONTH IN US$. WHETHER MY CLIENT IS REQUIRED TO DEDUCT TAX AT SOURCE.
I AM NOT SURE ABOUT CHARGEABILITY IN INDIA OF RENT PAID TO SWEDEN PARTY. WHETHER AS PER DOUBLE TAXATION AVOIDANCE AGREEMENT WITH SWEDEN, SUCH RENT IS CHARGEABLE IN INDIA?

Ravikumar.G

Ravikumar.G (Expert)
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04 October 2008 TDS on payments to Non Residents u/s 195 is applicable.
Rate of Income tax as specified in :
a) Finance act of the relevant year, or
b) DTAA entered by CG u/s 92 or
c) Agreement notified by the CG u/s 90A
whichever is most beneficial to he assessee shall apply.

KETAN Y SHETH

KETAN Y SHETH (Querist)
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07 October 2008 I AM NOT SURE ABOUT CHARGEABILITY IN INDIA OF RENT PAID TO SWEDEN PARTY. WHETHER AS PER DOUBLE TAXATION AVOIDANCE AGREEMENT WITH SWEDEN, SUCH RENT IS CHARGEABLE IN INDIA?

PIYUSH JAIN

PIYUSH JAIN (Expert)
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07 October 2008 Most - favoured nation (MFN) clause

In certain treaties, where it is intended not to discriminate between countries within a group, a stipulation is incorporated generally through protocol or Exchange of Notes that in case, after the coming into force of the treaty, favourable terms in respect of specified matter are agreed to with any other state, the same terms will be applicable in respect of that treaty also. For instance in Indo-France treaty, the MFN clause provided that if India demits its taxation at source in respect of income from dividend, interest, Royalty etc. in any treaty with a member of OECD after 1st September, 1989, the same terms will apply to Indo-France treaty w.e.f. from the date the other treaty enters into force. As a consequence when a rate of 10% in respect of interest, royalty and rent of equipment was agreed to in Indo-German treaty w.e.f 1-4-1997 the original rates of 15% (for interest) and 20% (for royalty and equipment rental) in Indo-France treaty were substituted by 10% w.e.f 1-4-97. After Indo – German treaty, treaty with Sweden effective 1-4-1998 provided for nil taxation at source in respect of rental of equipment which being more favourable because applicable to Indo-France treaty also and such income became taxable only on existence of a P. E in the state of source.

So it is not taxable and cocered under DTAA
CAPIYUSH JAIN

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