Tds on payment made to indian branch of foreign compnay
This query is : Resolved
08 December 2017
Hi Everyone..
Please suggest TDS implication on payment made to Indian branch of foreign reinsurance company.
Our understanding in respect of TDS implication on payment made to Indian branch of foreign reinsurance company.
1. Since Reinsurance branches are treated non-resident entities for Indian tax purposes and in the absence of lower/nil TDS certificates, all the payments which are received by the reinsurance branches would be subject to withholding at 40% (plus applicable surcharge and education cess). And need to file 15CA & 15CB certificate
2. Where lower TDS certificate is provided u/s 197(1), TDS should be deducted accordingly as per that certificate and No need to file 15CA & 15CB certificates. as the rate is already decided by Income tax officer u/s 197(1), so no need to take opinion from CA about TAX rate.
We have obtain lower TDS certificate u/s 197(1) from that company, Please suggest we have to file 15CA / 15CB certificate for the above payment or not.
Ankit Patel
Mo. No. - 8691908859
Please suggest TDS implication on payment made to Indian branch of foreign reinsurance company.
Our understanding in respect of TDS implication on payment made to Indian branch of foreign reinsurance company.
1. Since Reinsurance branches are treated non-resident entities for Indian tax purposes and in the absence of lower/nil TDS certificates, all the payments which are received by the reinsurance branches would be subject to withholding at 40% (plus applicable surcharge and education cess). And need to file 15CA & 15CB certificate
2. Where lower TDS certificate is provided u/s 197(1), TDS should be deducted accordingly as per that certificate and No need to file 15CA & 15CB certificates. as the rate is already decided by Income tax officer u/s 197(1), so no need to take opinion from CA about TAX rate.
We have obtain lower TDS certificate u/s 197(1) from that company, Please suggest we have to file 15CA / 15CB certificate for the above payment or not.
Ankit Patel
Mo. No. - 8691908859
09 December 2017
You have to file 15CA and 15CB certificate for the above payment tax compliance certificate is required.
09 December 2017
Dear Sir,
Main purpose of 15CA/ 15CB is to decide tax rate. In this question tax rate is already decided by income tax department by issuing lower TDS certificate u/s 197. Then why we have to submit 15CA / 15CB certificate.
Its payment is done in India in Indian currency to branch of foreign reinsurance company which has PE in India.
Then why 15CA / 15CB certificate is required.
Main purpose of 15CA/ 15CB is to decide tax rate. In this question tax rate is already decided by income tax department by issuing lower TDS certificate u/s 197. Then why we have to submit 15CA / 15CB certificate.
Its payment is done in India in Indian currency to branch of foreign reinsurance company which has PE in India.
Then why 15CA / 15CB certificate is required.
09 December 2017
Agreed with you no need of 15CA/15CB as there's no foreign remittance.
09 December 2017
Please tell me in which section TDS to be deducted in section 195 or any other.
Because payment made to Indian branch of foreign reinsurance company and nature of payment is reinsurance premium.
Because payment made to Indian branch of foreign reinsurance company and nature of payment is reinsurance premium.
09 December 2017
Refer TDS certificate issued u/s 197(1)
09 December 2017
In case of 195 TDS you might have got certificate of lower deduction u/s 195(3)
12 December 2017
Yes Sir, We have received Lower TDS deduction certificate u/s 197(1) / 195 of income tax Act 1961.
27 July 2025
Here’s a clear summary regarding **TDS on payments made to Indian branch of a foreign reinsurance company** based on your conversation and general tax principles:
---
### 1. **Nature of Indian branch of foreign company**
* The Indian branch of a foreign reinsurance company is treated as a **non-resident entity** for Indian tax purposes.
* If the branch has a **Permanent Establishment (PE) in India**, the income attributable to the PE is taxable in India.
---
### 2. **TDS applicability & section**
* Payments made to the Indian branch of a foreign company are **subject to TDS under Section 195** of the Income Tax Act.
* The applicable TDS rate is generally **40% + surcharge + cess** if no other rates or certificates are available.
---
### 3. **Lower/Nil TDS Certificate**
* If the Indian branch obtains a **lower or nil TDS certificate under Section 197(1) or Section 195(3)**, TDS has to be deducted as per the certificate.
* The certificate is issued by the Income Tax Department after considering the case specifics.
---
### 4. **Form 15CA / 15CB filing**
* **Form 15CA (declaration of remittance) and Form 15CB (chartered accountant certificate)** are generally required for foreign remittances.
* **In this case, the payment is made in India in Indian currency to the Indian branch (which has a PE here)**, so **no foreign remittance occurs.**
* Therefore, **filing of 15CA and 15CB is generally not required.**
---
### Summary Table
| Aspect | Details |
| --------------------- | -------------------------------------------------------------------------------- |
| Payee | Indian branch of foreign reinsurance company |
| TDS Section | Section 195 |
| Default TDS Rate | 40% + surcharge + cess |
| Lower TDS certificate | Deduct as per certificate under Sec 197(1) / 195(3) |
| Filing of 15CA / 15CB | Not required if payment made in India in Indian currency (no foreign remittance) |
---
**In conclusion:**
* Deduct TDS under Section 195 as per lower TDS certificate.
* No need to file Form 15CA/15CB for this transaction if there is no foreign currency remittance.
* Maintain the lower TDS certificate and other documentation for records.
---
If you want, I can help draft a formal note or TDS compliance checklist based on this. Would you like that?
---
### 1. **Nature of Indian branch of foreign company**
* The Indian branch of a foreign reinsurance company is treated as a **non-resident entity** for Indian tax purposes.
* If the branch has a **Permanent Establishment (PE) in India**, the income attributable to the PE is taxable in India.
---
### 2. **TDS applicability & section**
* Payments made to the Indian branch of a foreign company are **subject to TDS under Section 195** of the Income Tax Act.
* The applicable TDS rate is generally **40% + surcharge + cess** if no other rates or certificates are available.
---
### 3. **Lower/Nil TDS Certificate**
* If the Indian branch obtains a **lower or nil TDS certificate under Section 197(1) or Section 195(3)**, TDS has to be deducted as per the certificate.
* The certificate is issued by the Income Tax Department after considering the case specifics.
---
### 4. **Form 15CA / 15CB filing**
* **Form 15CA (declaration of remittance) and Form 15CB (chartered accountant certificate)** are generally required for foreign remittances.
* **In this case, the payment is made in India in Indian currency to the Indian branch (which has a PE here)**, so **no foreign remittance occurs.**
* Therefore, **filing of 15CA and 15CB is generally not required.**
---
### Summary Table
| Aspect | Details |
| --------------------- | -------------------------------------------------------------------------------- |
| Payee | Indian branch of foreign reinsurance company |
| TDS Section | Section 195 |
| Default TDS Rate | 40% + surcharge + cess |
| Lower TDS certificate | Deduct as per certificate under Sec 197(1) / 195(3) |
| Filing of 15CA / 15CB | Not required if payment made in India in Indian currency (no foreign remittance) |
---
**In conclusion:**
* Deduct TDS under Section 195 as per lower TDS certificate.
* No need to file Form 15CA/15CB for this transaction if there is no foreign currency remittance.
* Maintain the lower TDS certificate and other documentation for records.
---
If you want, I can help draft a formal note or TDS compliance checklist based on this. Would you like that?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
OR add as source on Google news
- Medical reimbursement of hospitalization
- US CPA Course
- Accounting for non refundable grant received under National Livestock Mission Scheme.
- CAPITAL GAIN ITR
- Individual received money from father need to show in itr
- Cash deposit in individual account more than one crore in FY24-25
- Excess tax paid against liability us140b and itr us 139(8a)
- ITR - 3 Technical glitch
- Stamp duty on acquisition
- ITR Form for the AY 2025-26
- Liquid fund STCG show - Income head
- Where to show STCG on Silver ETF in ITR2
- Sale of Fixed Asset reporting in Fixed Asset Chart asper compnies Act
- Guidance Required on Returning Defective Equipment Purchased Without ITC Claim
- About foundation registration
- Income tax calculation-salary
- Deemed capital gain due to unutilized amount in CG account scheme
- Income Tax and FEMA Implications for Receiving Equity Stake in a UK Company as CTO
- Crumb Rubber
- HUF Gifts
Trending Online Classes
-
Input Tax Credit, GST refunds and Recovery of refunds- Roadblocks and way outs
CA Nipun Arora03 September 2025 -
GST LIVE Certification Course - 43rd Weekdays Batch(With Govt Certificate)
Industry Expert15 September 2025
OR add as source on Google news
CAclubindia
