TDS On Remuneration paid to Foreign Faculty

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This discussion clarifies whether Tax Deducted at Source (TDS) is applicable on remuneration paid to foreign faculty engaged by Indian educational institutions as freelancers. It explains that if the faculty stays less than 90 days and their services fall under 'Independent Personal Services' as per a Double Taxation Avoidance Agreement (DTAA), and they have no fixed base in India, then the remuneration is typically taxable only in their home country, making TDS in India unnecessary. The example of a US professor highlights this exemption under the Indo-US DTAA.

Venkat

Venkat (Querist)
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03 November 2023 Dear Sir/Madam,

We are an educational institution engaging foreign faculty (NR) to teach few subjects as free lancers.
1. Is TDS applicable on remuneration paid to them? Under which section and what is the percentage of tds If applicable? (They will not stay more than 90 days in india to teach those subjects)
2. What are the required documents we have to take from them (whether exempted or taxable).

Could you please brief in this regard.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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03 November 2023 It's exempted no TDS applicable.

For example one may consider the case of a US university professor, Mr. Levin who is a resident of USA and has been engaged by an Indian educational institute for conducting some classes in India for 10 days. The question is whether honorarium paid to him is liable for TDS u/s. 195. One may note that the services provided by Mr. Levin are covered by “Independent Personal services” clause of DTAA. He does not have any fixed base available to him in India for providing his services and he is also not in India for more than 90 days. Accordingly as per Indo US DTAA, his remuneration / honorarium is taxable only in US and not in India. As such no TDS in India is applicable in this case.

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Venkat

Venkat (Querist)
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03 November 2023 Thank a lot for your valuable reply sir

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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04 November 2023 You are welcome...
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