Professional Fee to NR

Our comapny is engaged in the business of rice supply. For selling rice in US we have done some certifications from US based certification company. Now we have received an invoice of 1260 USD for Q1 FY 20-21 on pro-rated basis. It is clearly mentioned in invoice that they need full amount without deduction of tax or they are not responsible if any tax liability is arising.

Now my query is,

1. Do we need to depsot TDS @ 10% considering Professional Services to the Govt of India?

2. US based certification company obtained Indian PAN whereas they don't have any business branch in India.

3 Does it covered under DTAA?
 

Replies (2)
Quick Summary
A rice supply company has received an invoice for US-based certifications required for selling rice in the US. The invoice is for Q1 FY 20-21 on a pro-rated basis, with the US company requesting full payment without tax deduction. The company is seeking clarification on whether they need to deposit TDS at 10% for professional services to the Indian government, considering the US company has an Indian PAN but no business branch in India. They also want to know if the Double Taxation Avoidance Agreement (DTAA) applies in this situation.

Hi,

1. yes income is taxable in India if it accrues in India

2. DTAA needs to be analysed before making any deductions

thanks,
Mohit
8335093446

Yes income is taxable in india

A tax treaty between two or more countries to avoid taxing the same income twice is known as Double Taxation Avoidance Agreement (DTAA). This means that there are agreed rates of tax and jurisdiction on specified types of income arising in a country. When a tax-payer resides in one country and earns income in another country, he is covered under DTAA, if those two countries have one in place. DTAAs can be either comprehensive, i.e. covering all types of income or specifically target certain types of income. This depends on the types of businesses/holdings of citizens of one country in another. Some of the common categories covered under DTAAs are services, salary, property, capital gains, savings/fixed deposit accounts, etc.

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