Our company is using Uber cabs for employees by the Uber dash board. The payment is made on the basis of monthly statement generated by Uber dashboard. But the Uber company is not registered in India and they do not have GST and PAN number. So could anyone suggest if TDS needs to be deducted while paying the amount to Uber's bank account in India.
My personal opinion is- Uber does not has a permanent establishment in India as they do not have any fixed place of business in India. The HO of Uber is in California [US], and India does have DTAA with the US. Since India has DTAA with the USA, the income, in this case, can be taxable only if there is a PE in India.[Article 7]
TAX SHOULD NOT BE DEDUCTED AT SOURCE because, as per the present laws, no income accrues or arises to Uber in India.
Finance Act, 2018 has bought the concept of "significant economic presence constituting business connection," but as of now, it is not operational as no notification has been issued in this regards.
Further, even if there is a business connection, but not a permanent establishment, then Explanation 2A shall have no application because if there exists a DTAA, then business profits are taxable only if there is a PE
[S.9(1)] Explanation 2A.—For the removal of doubts, it is hereby clarified that the significant economic presence of a non-resident in India shall constitute "business connection" in India and "significant economic presence" for this purpose, shall mean— (a) transaction in respect of any goods, services or property carried out by a non-resident in India including provision of download of data or software in India, if the aggregate of payments arising from such transaction or transactions during the previous year exceeds such amount as may be prescribed; or (b) systematic and continuous soliciting of business activities or engaging in interaction with such number of users as may be prescribed, in India through digital means: Provided that the transactions or activities shall constitute significant economic presence in India, whether or not,— (i) the agreement for such transactions or activities is entered in India; or (ii) the non-resident has a residence or place of business in India; or (iii) the non-resident renders services in India: Provided further that only so much of income as is attributable to the transactions or activities referred to in clause (a) or clause (b) shall be deemed to accrue or arise in India.
Other view Since as per Article 5 of the Inda-USA DTAA, the following constitutes a permanent establishment,— "The furnishing of services, other than included services as defined in Article 12 (Royalties and Fees for Included Services), within a Contracting State by an enterprise through employees or other personnel, but only if, activities of that nature continue within that State for a period or periods aggregating more than 90 days within any twelve-month period" The business profits in relation to activities carried out in India shall be taxable in India by virtue of Article 7 and hence Tax should be deducted at source u/s 195. [This view is countered on the ground that Uber is not the one who is rendering the service, but it's the driver who is actually rendering the service. Uber is merely providing a platform for the users.]
CAclubindia
