Withholding Tax question

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A foreign company without a Permanent Establishment (PE) in India, but possessing a PAN, is inquiring about the possibility of obtaining a lower withholding tax (WHT) certificate. The company provides IT/ITES services to Indian clients, with all servers and data located outside India. While fees for such services can be subject to a 20% WHT rate in India, or 10% under a Double Taxation Avoidance Agreement (DTAA), the query specifically asks if a reduced rate of 2% or 5% is achievable.

Venkatraman Iyer

Venkatraman Iyer (Querist)

29 February 2024 Hello,
Can a Foreign Company with no PE but has a PAN can request for a lower Withholding tax certificate.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 February 2024 What is the nature of payment.
To seek relief in the Withholding Tax Rates, NRI/Foreign Citizen can apply for Lower TDS Certificate (TDS Exemption Certificate) with the Jurisdictional Income Tax Authority.

Venkatraman Iyer

Venkatraman Iyer (Querist)

29 February 2024 Foreign Company provides IT/ITES Services to Indian Companies where the IT Server, Data etc are all held outside India.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

01 March 2024 If the fees paid by an Indian company to a foreign company for availing of services in relation to computer software are regarded as “fees for technical / included services”, they could be subject to withholding tax in India at the rate of 20% on gross basis .

Venkatraman Iyer

Venkatraman Iyer (Querist)

01 March 2024 Under DTAA the WHT rate is 10%. So my question is can i apply for a reduced WHT of lets say 2% or 5%.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

01 March 2024 It's not possible to reduce the rate.

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