Tds on payment to sub contractor of bangladesh

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 October 2011 WE are going pay sub contractors of Bangladesh for sub contractor services. Are we liable to deduct TDS on the same.

We are also having DTAA with Bangladesh....

Please Reply it as soon as possible.

Vishal D Shah

Vishal D Shah (Expert)

11 October 2011 Following clarifications reqd:

1) Whether sub contractor is individual or other than it?

2) Whether sub contractor has permanent establishment in India?

3) If he is individual, whether he is present in India in PY & for how many days? Expected to be present for more than 120 days?

4) There is no FTS clause in Indo Bangla DTAA, hence in case of Co it will fall in Article 24. Hence will be governed by Sec 9 of Income Tax Act.

Regards,
cavishalshah @ gmail.com

CA. Anuj Gupta

CA. Anuj Gupta (Expert)

13 October 2011 I beg to disagree on point no. 4 of Vishal's reply. It has been held in various decisions that in case of treaties which don't have FTS clause ,the income shall be taxable under Article 7 i.e. "Business Profits" and NOT Article 24. Also Sec 9 of Income Tax Act has no role to play once we go into Treaty application.

Money paid in present case shall not be taxable in India if there is NO PE of Foreign enterprise in India.

Anuj
+91-9810106211
femaquery@gmail.com

Vishal D Shah

Vishal D Shah (Expert)

17 October 2011 Thanks for clarification Anuj.

Then when shall clause 24 be applicable, as it mentions that income if does not fall under specific clauses of DTAA, it shall be governed under it, as i was unaware of case laws relating to it.

Regards.. Vishal

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