10 August 2012
There is no separate rate prescribed for TDS on rent paid to NRIs. Therefore, this would fall under the category of other income and be subject to a TDS of 30 per cent.
Again, just like in the case of capital gains on assets, the payer of the rent is responsible for deducting the tax at source. The same process of getting a TAN and issuing a TDS certificate applies in this case too
10 August 2012
What about payment of commission to a Non Resident, who is not having PE in India? Does the Explanation 2 of Sec. 195 introduced in Finance Bill/Act 2012 makes a liability on a person to withhold tax before making payment of commission. Because Article 22 of many DTAA provides that the income would be taxable in the state of residence. Please suggest what is correct?
14 August 2012
@swasti.. in the absence of PE, the business profits are not taxable in India. Expalnation 2 to section 195 shall arise only in the case where the income is taxable.
Clause 1 of Article 22 says that it shall be taxed in the state of residence. however, if you look at clause 3, it says it shall be taxable in both states and it overrides clause 1.
there could be a position opted that once it is business profits, it cannot fit into other source of income ie it cannot fit into clause 22. business profits are not taxable in india because there is no PE
if you are not clear contact me at srinathapavaki@gmail.com
16 August 2012
Mr. Srinath, thanks a lot but I am not able to send mail on the id provided by you. I had tried thrice, but everytime it is failing. I don't know the reason but could you give me another id?
CAclubindia
