Tds on contract remittance to china
This query is : Resolved
kaushal Nagpal
(Querist)
24 September 2014
Dear sir
An agreement with china vendor for fabrication of stall ın a fair in china.what rate of tds will be applicsble?
An agreement with china vendor for fabrication of stall ın a fair in china.what rate of tds will be applicsble?
kaushal Nagpal
(Querist)
24 September 2014
Pls revert
kaushal Nagpal
(Querist)
24 September 2014
Pls revert
27 July 2025
For payment to a foreign vendor (like your China vendor) for services such as fabrication of a stall in a fair held **outside India**, the TDS provisions depend on whether the income is deemed to accrue or arise in India.
### Key points:
* If the **services are rendered completely outside India** (fabrication of stall in China for a fair held in China), then **no income arises in India**, so **no TDS is applicable** under section 195.
* If the payment is for services rendered **outside India**, **no TDS deduction** is required.
---
### However, if the payment is for any services that are considered to have a **business connection or source in India**, then TDS under **Section 195** may be applicable.
### TDS Rate:
* In case TDS is applicable, the rate would depend on the India-China Double Taxation Avoidance Agreement (DTAA).
* Typically, under DTAA, the rate is generally around **10%** but can vary based on the specific nature of services.
---
### Summary for your case:
* Since fabrication of stall is done in China (services outside India), **no TDS is required to be deducted**.
* If you want to be extra cautious, get a **tax residency certificate** from the vendor and documentation showing services were performed outside India.
---
If you want, I can help you draft a formal note or a checklist of documents you should get to support this treatment. Would you like that?
### Key points:
* If the **services are rendered completely outside India** (fabrication of stall in China for a fair held in China), then **no income arises in India**, so **no TDS is applicable** under section 195.
* If the payment is for services rendered **outside India**, **no TDS deduction** is required.
---
### However, if the payment is for any services that are considered to have a **business connection or source in India**, then TDS under **Section 195** may be applicable.
### TDS Rate:
* In case TDS is applicable, the rate would depend on the India-China Double Taxation Avoidance Agreement (DTAA).
* Typically, under DTAA, the rate is generally around **10%** but can vary based on the specific nature of services.
---
### Summary for your case:
* Since fabrication of stall is done in China (services outside India), **no TDS is required to be deducted**.
* If you want to be extra cautious, get a **tax residency certificate** from the vendor and documentation showing services were performed outside India.
---
If you want, I can help you draft a formal note or a checklist of documents you should get to support this treatment. Would you like that?
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