Foreign Taxation- Income deemed to accrue or arisen in India????

Hi Punit,

Firstly, TDS under section 195 arises when Income is taxable in India. To decide the taxability nature of Income is very important. As per your above query, please verify in the 'Receivable purchase agreement' whether money received by factoring company is commission or interest.

If the same is in the nature of commission, for facilitating exports by Indian exporter, the income may not be taxable as per Income tax act. This is as per various judgements.

If the income is in the nature of Interest, the same is taxable as per the Act. Then, Please go through the DTAA with the respective country and see the taxability in DTAA. If the same is also taxable as per DTAA, then TDS needs to be deducted as per beneficial provisions of the Act or DTAA.

Also, Please note the requirements of PAN / TRC as per the Provisions of Section 206AA.

In case of any further questions, you can contact me at +91 9030909709