Tds on payment of technical fee to non residents ?

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This discussion clarifies whether Tax Deducted at Source (TDS) is applicable when a company pays for technical services provided online by a foreign company without a Permanent Establishment (PE) in India. The consensus is that TDS under Section 195 is indeed applicable at a rate of 20%, plus surcharge and cess, totalling 21.84%. To potentially reduce this rate to 10% under a Double Taxation Avoidance Agreement (DTAA), the foreign company must file Form 10F online.

FinTax (CA ABHISHEK SINGH)

FinTax (CA ABHISHEK SINGH) (Querist)
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19 September 2024 A company has received invoice for 10000 usd for technical service provided by foreign company located in germany through online mode. Foreign company doesn't have PE in India.

Is tax needs to be deducted? If yes then at what rate ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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19 September 2024 TDS applicable under section 195 at the rate of 20% being payment for technical services.

Sowmya.G

Sowmya.G (Expert)
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20 September 2024 The fees for technical services attract 20% tds plus 5% surcharge and 4% education cess that works out to 21.84% as per income tax act. If you want to claim the benefit of DTAA for tds at the rate of 10%, the foreign company needs to file Form 10F online via www.incometax.gov.in.

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