TDS rate on rent of equipment paid to a foreign parent company which has an Indian PAN

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Peter Dance (Querist)
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24 May 2021 When a foreign entity sends plant and equipment to india and leases that plant and equipment to its Indian subsidiary, what rate of withholding tax is deducted when filing in 15CA/CB forms.
I noted on your site that one of the professionals Uma Shanker Sharda answered a similar question and he stated 10% under section 194 I. However that section says 10% is for a combined rent of buildings with plant and equipment We have noticed in the construction sector that when renting plant and equipment (like a forklift or crane) locally that the TDS rate is 2%.
Are these the percentages that apply when the foreign company has a PAN number in India or are they 5% as per section 194B. Or does section 195 apply? In which case it would be 10% for "fees" as it is not combined with building rental which has rate of 30%. I want to double check as this is very confusing
Thanks Peter Dance UIPL

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 May 2021 Section 195 TDS only applicable here being payment to non resident. TDS applicable only if the payment is taxable in India. PE is required for taxability of such income.

Peter Dance

Peter Dance (Querist)
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24 May 2021 Dear Sir, Thanks for reply and advice. Yes, Section 195 is applicable. What is the correct TDS deduction rate? 10%? as the Plant and Equipment rent is as a result of a written agreement (Contract) . Please confirm - Thanks Peter

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 May 2021 10% is for residents. For non resident TDS applicable at 30% plus cess and sc if income is taxable in India.

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