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Kirti Ram Dabral (Accounts Ex.) (31 Points)

10 May 2020

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?

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2 Replies

Mohit Jagnani (Professional - CA firm) (524 Points)
Replied 10 May 2020

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

debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 12 May 2020

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.