TDS rate on rent of equipment paid to a foreign parent company which has an Indian PAN
This query is : Resolved
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
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
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.
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
24 May 2021
10% is for residents. For non resident TDS applicable at 30% plus cess and sc if income is taxable in India.
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
- CG Tax On residential property
- Applicable TDS for Purchase of Flat from NRI
- Claiming exemption of perquisite for employee-owned car under New Tax Regime in ITR-2
- PPF interest-As Exempt Income disclosure
- Under construction property in ITR
- Gift of mutual fund units to daughter
- Building tax payment deduction in rental Income
- Upload Level ValidationITR3Category of Defect B/D
- Not able to file ITR
- NRI ITR2 account in 2025-26 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.
- Section 194JA & JB Income which ITR Form to use
- Pass word to open justification report for Q1 for FY 2026-27
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
