TDS U/S 195

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Jitender Kumar Sultania (Querist)
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05 January 2010 an exporter an resident in india is paying testing charges of its product to a party for testing charges in abroad(a non-resident) though EEFC a/c by DD in US $ and the product is sold at abroad wheather tds is to be deducted in this case before payment or not.

Sudhindra

Sudhindra (Expert)
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06 January 2010 Any payment made to in foreign currency to any entity having a place of busines abraod and or an overseas entity is liable to exemption under withholding tax of section 195 of the Income Tax act however the same depends from country to country to which the Double Tax Avoidance Agreement (DTAA) is entered into with such country. Hence it needs to be clarified whether DTAA is entered into with such a country to which payment is being made, if its there then withholding tax certificate from a Chartered Accountant has to be attached and no tax be deducted therefrom.

In case no such DTAA is entered into then tax has to be deducted and exemtion to that effect is available under section 90 and 91 of the income tax act to the extent of payment already made, towards TDS.

Jitender Kumar Sultania

Jitender Kumar Sultania (Querist)
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06 January 2010 thanks sir

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