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Payment to Foreign Co

Deepak Tapse (Accounts Manager - Taxation) (1771 Points)

10 March 2011

We are making payment fo foreign compnay for service rendered by them in India. My question is whether we have to collect PAN from them or not.

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5 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 10 March 2011

PAN is mandatory or u have to deduct 20% TDS

Ashish Ojha (Chartered Accountant) (469 Points)
Replied 10 March 2011

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..

K.Srini (Sr. Manager - Taxation) (37 Points)
Replied 11 March 2011

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.

Ashish Ojha (Chartered Accountant) (469 Points)
Replied 11 March 2011

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

CA. Anuj Gupta (Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA) (7014 Points)
Replied 20 April 2011

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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