Tds rate on business exhibition services acquired from usa
This query is : Resolved
CA. Afjal Y Hamirani
(Querist)
01 August 2012
HELLO SIR/MADAM,
I HAVE VERY MUCH CONFUSED THAT WHAT % TDS IS LEVIED ON BUSINESS EXHIBITION SERVICES ACQUIRED FROM ONE OF THE USA BASED COMPANY. BECAUSE IN TREATY AS WELL AS IN OUR TAX LAW TDS % IS NOT WRITTEN IN RESPECT OF BUSINESS EXHIBITION SERVICES. FOR THIS SERVICES WHAT I WILL MENTION IN FORM 15CB.
THANKING YOU..
I HAVE VERY MUCH CONFUSED THAT WHAT % TDS IS LEVIED ON BUSINESS EXHIBITION SERVICES ACQUIRED FROM ONE OF THE USA BASED COMPANY. BECAUSE IN TREATY AS WELL AS IN OUR TAX LAW TDS % IS NOT WRITTEN IN RESPECT OF BUSINESS EXHIBITION SERVICES. FOR THIS SERVICES WHAT I WILL MENTION IN FORM 15CB.
THANKING YOU..
Vishal D Shah
(Expert)
01 August 2012
Elloborate the term business exhibition service in relation to exact service rendered by whom and where.
Message likes :
1 times
Amol S Joglekar
(Expert)
02 August 2012
if it is not there in treaty, go by sec 195 rather than 194J
Vishal D Shah
(Expert)
02 August 2012
What % u/s 195?
28 July 2025
This is a great question — and your confusion is very understandable. TDS on **business exhibition services** acquired from a **foreign (USA-based) company** involves cross-border taxation under **Section 195** of the Income Tax Act and applicable **DTAA** (India–USA treaty). Let’s break this down:
---
## ✅ Step-by-Step Analysis
### 1. **Nature of Service: What is "Business Exhibition Service"?**
Please clarify, but typically, this includes:
* Renting stall/booth space in a business expo held **outside India** (e.g., USA)
* Advertising, promotional or logistical support for Indian business participation
If the **services are rendered entirely outside India**, and the foreign company has **no PE (Permanent Establishment) in India**, this changes the TDS implication significantly.
---
### 2. **Relevant Law: Section 195**
Section 195 applies to **any sum chargeable under the Income Tax Act** paid to a **non-resident**.
Key question:
> **Is the amount paid to the US company “chargeable to tax” in India?**
---
### 3. **Apply DTAA (India–USA Treaty)**
If the payment is:
* For services rendered **outside India**,
* And the US company has **no Permanent Establishment (PE)** in India,
Then **such income is not taxable in India** under the India–USA DTAA.
### 📌 Relevant DTAA Articles:
* **Article 7 (Business Profits)**: Profits of a US enterprise are taxable in India only if the enterprise has a **PE in India**.
* **Article 12 (Fees for Included Services)**: Applies **only if services are technical/consultancy in nature**, which **business exhibition services typically are not**.
🔹 So, **if the service is non-technical and performed outside India**, it's **not taxable in India** ⇒ **No TDS required** under Section 195.
---
## ✅ What to Mention in **Form 15CB**
If you're issuing **Form 15CB** for such a remittance, mention:
* **Nature of Remittance:** Business Exhibition Service Fees
* **Section applicable:** **195**
* **Taxability in India:** Not taxable under **Article 7** of India–USA DTAA, as:
* Services rendered outside India
* Non-resident has no PE in India
* **TDS Rate:** **Nil**
* **Reason:** Income not chargeable under Income Tax Act by virtue of DTAA
---
## ✅ If Taxable (Rare Cases):
Only if:
* The US company has a **PE in India**, or
* Services are **technical/managerial/consultancy**, and
* Used in India
Then, TDS may apply at:
* **10% + SC + Cess**, if it qualifies under **Article 12** (Fees for Included Services)
* Or **40%** (business profits, if no treaty applies)
But again, this is rare for general **exhibition space rental or participation fees**.
---
## ✅ Final Answer:
| Case | TDS under Section 195? | Rate |
| ------------------------------------------------------ | ---------------------- | ----------------------------- |
| Exhibition services **outside India**, no PE in India | ❌ No TDS | Nil |
| If services are **technical** or rendered **in India** | ✅ Yes | 10% (under DTAA) or 40% (Act) |
---
Would you like a sample 15CB draft for this case?
---
## ✅ Step-by-Step Analysis
### 1. **Nature of Service: What is "Business Exhibition Service"?**
Please clarify, but typically, this includes:
* Renting stall/booth space in a business expo held **outside India** (e.g., USA)
* Advertising, promotional or logistical support for Indian business participation
If the **services are rendered entirely outside India**, and the foreign company has **no PE (Permanent Establishment) in India**, this changes the TDS implication significantly.
---
### 2. **Relevant Law: Section 195**
Section 195 applies to **any sum chargeable under the Income Tax Act** paid to a **non-resident**.
Key question:
> **Is the amount paid to the US company “chargeable to tax” in India?**
---
### 3. **Apply DTAA (India–USA Treaty)**
If the payment is:
* For services rendered **outside India**,
* And the US company has **no Permanent Establishment (PE)** in India,
Then **such income is not taxable in India** under the India–USA DTAA.
### 📌 Relevant DTAA Articles:
* **Article 7 (Business Profits)**: Profits of a US enterprise are taxable in India only if the enterprise has a **PE in India**.
* **Article 12 (Fees for Included Services)**: Applies **only if services are technical/consultancy in nature**, which **business exhibition services typically are not**.
🔹 So, **if the service is non-technical and performed outside India**, it's **not taxable in India** ⇒ **No TDS required** under Section 195.
---
## ✅ What to Mention in **Form 15CB**
If you're issuing **Form 15CB** for such a remittance, mention:
* **Nature of Remittance:** Business Exhibition Service Fees
* **Section applicable:** **195**
* **Taxability in India:** Not taxable under **Article 7** of India–USA DTAA, as:
* Services rendered outside India
* Non-resident has no PE in India
* **TDS Rate:** **Nil**
* **Reason:** Income not chargeable under Income Tax Act by virtue of DTAA
---
## ✅ If Taxable (Rare Cases):
Only if:
* The US company has a **PE in India**, or
* Services are **technical/managerial/consultancy**, and
* Used in India
Then, TDS may apply at:
* **10% + SC + Cess**, if it qualifies under **Article 12** (Fees for Included Services)
* Or **40%** (business profits, if no treaty applies)
But again, this is rare for general **exhibition space rental or participation fees**.
---
## ✅ Final Answer:
| Case | TDS under Section 195? | Rate |
| ------------------------------------------------------ | ---------------------- | ----------------------------- |
| Exhibition services **outside India**, no PE in India | ❌ No TDS | Nil |
| If services are **technical** or rendered **in India** | ✅ Yes | 10% (under DTAA) or 40% (Act) |
---
Would you like a sample 15CB draft for this case?
Amol S Joglekar
(Expert)
22 March 2026
Noted the contents. Thank you
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