Withholding tax u/s 195
This query is : Resolved
23 August 2007
We are a company in India who have utilized the services of a recovery agent in US. The recovery agent has sent a invoice for US$8000 for collecting the dues from our customer.
Whether we have to deduct tax at source in respect of the payment? Since, the service is rendered outside India and payment will be received outside India, I presume the income is not taxable in India
Please advise
Whether we have to deduct tax at source in respect of the payment? Since, the service is rendered outside India and payment will be received outside India, I presume the income is not taxable in India
Please advise
23 August 2007
It's based on DTAA between US & India - Whether to deduct or not deduct.
If US gives unilateral exemption - i.e. Exemption of tax paid in india, TDS can be deducted.
Otherwise, TDS - Not required, As there is no income arising in India.
If US gives unilateral exemption - i.e. Exemption of tax paid in india, TDS can be deducted.
Otherwise, TDS - Not required, As there is no income arising in India.
23 August 2007
yes tds is applicable as per dtaa but where dtaa is silent ,income tax act is operative
23 August 2007
DTAA is as below
Article 15 - Independent personal services - 1. Income derived by a person who is an individual or firm of individuals (other than a company) who is a resident of a Contracting State from the performance in the other Contracting State of professional services or other independent activities of a similar character shall be taxable only in the first-mentioned State except in the following circumstances when such income may also be taxed in the other Contracting State :
(a) if such person has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or
(b) if the persons stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 90 days in the relevant taxable year.
My query is the phrase "performance in the other Contracting State" doesnt it mean in India
whereas in our case the service was provided in USA
Article 15 - Independent personal services - 1. Income derived by a person who is an individual or firm of individuals (other than a company) who is a resident of a Contracting State from the performance in the other Contracting State of professional services or other independent activities of a similar character shall be taxable only in the first-mentioned State except in the following circumstances when such income may also be taxed in the other Contracting State :
(a) if such person has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or
(b) if the persons stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 90 days in the relevant taxable year.
My query is the phrase "performance in the other Contracting State" doesnt it mean in India
whereas in our case the service was provided in USA
23 August 2007
As per DTAA, if TDS is applicable then the company has to deduct the Tax at source, otherwise not.-pl. refer Article-15
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