We have to hire an Australian national freelancer. For the purpose of this contract, he is not traveling to India at all nor does he has an established set-up in India. India and Australia have a Double Taxation Avoidance Treaty for cases like this.
My question is about TDS applicable on his payment.
a. Do we need to deduct TDS @ 10%?
b. Is this particular case covered under double taxation avoidance treaty? Will the section 195 of Income tax Act be applicable or the treaty?
a. TDS deduction will depend on the country from which you are importing such Service
b. Yes Applicable...
Country in question is Australia as I had stated earlier. Is TDS applicable?
Yes... 10% ll be deduct*....
Note :
Tax on royalties and fees for technical services will be levied in the country of source as follows
A. 10% in case of rental of equipments and services provided alongwith know-how and technical services
B. In any other cases
- During first 5 years of agreement - 15% if payer is Govt/ Specified Organisation - 20% in other cases
- Subsequent Years - 15% in all cases
Income of Govt/ certain institutions exempt from taxation in the country of source
1. Will the Government of India issue a receipt or any other document to Freelancer for the tax paid?
2. Can the Freelancer claim tax credit in Australia in this case?
R P S K & Associates
Nashik
CA Inter
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CAclubindia
