Tds on foreign agents
This query is : Resolved
28 November 2011
According to section 195 of Income Tax Act, TDS has to be deducted at 30% on services by foreign agents.
Under this situation we have three solutions:
1. Under section 195 (5), the assessing officer has the power to exempt or reduce the TDS on foreign agents.
2. Under DTAA (Double Taxation Avoidance Agreement), the rates for TDS can be reduced as per the DTA rates.
3. Procedures can be undertaken to register the foreign agent as subject to Indian Income Tax and then he will have to follow all the procedures usually followed by any assessee in India.
Apart from the above, there is a circular which states that if the agent is non resident and works from a foreign soil, no part of his income arises in India. So no TDS has to be deducted under section 195. (Circular no.786 dated 07.02.2000).
Above mentioned is my opinion for TDS on foreign agents. Is it true or needs any rectification?
Under this situation we have three solutions:
1. Under section 195 (5), the assessing officer has the power to exempt or reduce the TDS on foreign agents.
2. Under DTAA (Double Taxation Avoidance Agreement), the rates for TDS can be reduced as per the DTA rates.
3. Procedures can be undertaken to register the foreign agent as subject to Indian Income Tax and then he will have to follow all the procedures usually followed by any assessee in India.
Apart from the above, there is a circular which states that if the agent is non resident and works from a foreign soil, no part of his income arises in India. So no TDS has to be deducted under section 195. (Circular no.786 dated 07.02.2000).
Above mentioned is my opinion for TDS on foreign agents. Is it true or needs any rectification?
CA. Anuj Gupta
(Expert)
05 December 2011
The whole opinion is going in different directions ,without coming to any definite conclusion.
The answer for "whether TDS needs to be deducted for payment of commission to foreign agent "is NO in terms of SC ruling in Toshuku Ltd.
Anuj
+91-9810106211
femaquery@gmail.com
The answer for "whether TDS needs to be deducted for payment of commission to foreign agent "is NO in terms of SC ruling in Toshuku Ltd.
Anuj
+91-9810106211
femaquery@gmail.com
Message likes :
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06 December 2011
Well that was an excellent suggestion. Now I have got the print out of the case as a reference with me.
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