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Payment u/s.195 & 115A

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Vicky Nagpal

Articled Assitant

36 Points Posted on 10 June 2011

Hi All

At what rate the TDS shall be deducted by an Indian Company?,in case of payment to a Non Resident u/s.195 for Architectural Designing Services

Recipient is from Canada not having any permanent establishment in India and does not have any fixed place of business in India however Non Resident do have PAN Card as per Income Tax Act

As per DTAA with Canada tax rate mentioned is 20% & also Sec.90(2) will be applicable.

Under Income Tax Act u/s.115A for contracts approved by central government Tax rate mentioned is 10%(SC+EC+SHEC), however if the above contract is not a notified contract/ not approved by the government then what rate is applicable?

Regards

Vicky

Replies (1)

Arihanth Jain

Chartered Accountant

1226 Points Posted on 10 June 2011

Firstly if the provider of service (NR) is a company then as per Article 12 of the DTAA between India-Canada fees for technical services are taxable in India only if the NR transfers knowledge to the resident Indian company.

If the NR is an Individual or a firm the Article 14 shall apply. Then income is taxable in India only if the NR was in India in the previous year for more than 183 days.

So take the benefit accordingly.

However there is section 206AA according to which tax shall be @ 20% if tds is deductable as per I.T. Act. So to be on safer side deduct tax as such without giving benefir of DTAA u/s 90(2).