Payment to Foreign Co

PAN is mandatory or u have to deduct 20% TDS

Check whether foreign firm is having PE in India. Depending upon Yes/No see Relevant Double tax Avoidance agreement if any.

Deduct 20% or amount specified in relevant DTAA/ 40% in case no DTAA,  Whichever is more..

If no withholding tax is laible to be deducted as per the DTAA then the tax deductable would be NIL and in such case the application of TDS @ 20% u/s 206AA will not be applicable.

@ mr. K shrini. In my opinion Section 206AA  should overrule section 90, in which benefit of lower tax is given.

First of any income should be taxable in India u/s 4 otherwise the question of sec. 90 and 206AA doesn't arise(as per SC decision in Ge Financial).Therefore if any income is not taxable in India then no issue of TDS deduction.

Anuj

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