TDS on Foreign Vendor Payments

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This query is : Resolved

Prakash Pai (Querist)

11 June 2010 Hi,
I request someone to kindly help me with the below query.
We are suppose to do TDS on some remittence that we are doing to USA, now with new Section 206AA, i believe this is at the rate of 10.3%. Same section also make it mandatory to have a PAN for USA customer. Customer is USA, states the fact that his company is making a tax loss and he would't be paying any tax in USA in which case the company in USA would't not be able to use the TDS amount to either claim a set off or any relief while filing the return in USA.
Now since the USA company would have a PAN in India is it possible for it cliam a refund of this tax amount by filing a tax return in India on the strenght of loss retrun filed by it in USA to US government, if not can US company file a request to department to provide a certificate for non deduction of tax.

taxindiaconnect

taxindiaconnect (Expert)

11 June 2010 The Us entity can file the return of Income in India by they will not get any benefit of TDS paid in India as that is the final rate of TDS on technical fees / royalty etc in India.

one can apply for a certificate for lower deduction or no deduction of tax to ITO, though, in the case of royalty or fees for Technical services, no relief is expected as the loss made by the company is USA will not be taken in to account due to deeming fiction of section 9 and concessional rate of section 115A

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