TDS on Technical Know-how
This query is : Resolved
13 January 2011
A Pvt. Ltd. Co. is making payment to German Co. as a lumpsum royalty for Technical Know How.
According to German DTAA, tax is to we withheld @ 10%.
But according to Section 206AA we need to deduct tax @ 20%.
1. Will Section 206AA override German DTAA? Do we need to add EC & SHEC to the same?
2. If the German Co. applies for PAN, then will it need to comply with Return filing & Auditing provisions? Total payment to be made is 125,000 EUROS.
Please put your arguments supporting your views. Reply urgently.
Thanks in advance
According to German DTAA, tax is to we withheld @ 10%.
But according to Section 206AA we need to deduct tax @ 20%.
1. Will Section 206AA override German DTAA? Do we need to add EC & SHEC to the same?
2. If the German Co. applies for PAN, then will it need to comply with Return filing & Auditing provisions? Total payment to be made is 125,000 EUROS.
Please put your arguments supporting your views. Reply urgently.
Thanks in advance
15 January 2011
1.Sec.206AA shall override the German DTAA and the rate shall be 20% if the foreign company doesn't have PAN.No EC & SC shall not be required to added to the same.
2.Yes , no where in Income Tax Act any exemption has been provided for exempting foreign companies from return filing and auditing provisions.
2.Yes , no where in Income Tax Act any exemption has been provided for exempting foreign companies from return filing and auditing provisions.
18 January 2011
Dear sir,
Thanks for your reply.
I have further queries on same issue.
1. Is it possible to plead non-applicability of Section 9(1)(vi), 44AB & 139; based on Article 24 of German DTAA. Relevant extract of which is reproduced below.
"Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances and under the same conditions are or may be subjected."
2. What is the proper course of action, Indian compnay can take? German compnay is not agreeable to withholding tax @ 20% neither it is ready to Audit its accounts.
Awaiting your valuable feedback.
Thanks for your reply.
I have further queries on same issue.
1. Is it possible to plead non-applicability of Section 9(1)(vi), 44AB & 139; based on Article 24 of German DTAA. Relevant extract of which is reproduced below.
"Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances and under the same conditions are or may be subjected."
2. What is the proper course of action, Indian compnay can take? German compnay is not agreeable to withholding tax @ 20% neither it is ready to Audit its accounts.
Awaiting your valuable feedback.
18 January 2011
1. Article 24 no way debars or stops indian Govt. to charge tax under Sec 9(1)(vi).Also how teh provisions of sec 44AB and sec 139 are more burdensome than what are applicable to Indian residents.
2. Indian Company just needs to deduct TDS @ 20% and pay the balance to the German Co.TDS deduction is mandatory and also its for the german Co. to comply with requirements of section 44AB and sec. 139and Indian Co. need not worry for the same.
Anuj
9810106211
2. Indian Company just needs to deduct TDS @ 20% and pay the balance to the German Co.TDS deduction is mandatory and also its for the german Co. to comply with requirements of section 44AB and sec. 139and Indian Co. need not worry for the same.
Anuj
9810106211
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- INTEREST APPLICABLE ON ITC REVERSAL PORTION
- TDS on Purchase of Immovable Property by NRI from NRI
- Capital gain from sale of house property
- Opting our of sec 44AD
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- Multiple trade mark
- FORM 26A APPLICABILITY
- Before GSTAT- APL-02 Vs APL-04
- Annual return in Gst
- SALE OF MOTOR CAR BY REGISTERED INDIVIDUAL
- GST Treatment of Insurance Commission for Existing GST Holder
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
- Address Change to another state of a Registered Trust with 12AB approval
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
