19 June 2008
If I make payment of commission to any foreign party, in that case should I deduct the TDS, if yes, what would be the rates for that. Plz reply to my this query.
19 June 2008
I think it comes under section 195(i) it says any income other than Royalty, fees for technical service, professional fees etc.. then the rates will be as follows:-
I)----if the recipient is non resident and non corporate assessee :- A} If the payment is Less than 10,00,000( in case of individual) or less than 1,00,00,000 in case of firm. then rate will be 30%+(3% Edu.cess on 30%) i.e. 30.90%
B} If recipient is individual and payment exceeds 10,00,000 or a firm only and payment exceeds 1 Crore to the firm, then tds rate @ 33.99%( including 2.5% surcharge)
II)--- If the recipient is non domestic company and A) If payment is Less than 1 Crore then tax rate will be 40%+3% Edu. cess i.e 41.20% effectively. B) If the payment is more than 1 Crore then effective tax rate will be 42.23% ( Including surcharge @2.5%)
19 June 2008
Also pl check the country to whom commision is paid (for the DTAA provisions) because provision is :- "The TDS rate should be lower of DTAA tax rate or Rates prescribed under section 195
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