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Query regarding issue of form 16a to non residents

Vijayalakshmi (Articled Assistant) (26 Points)

10 February 2012

We have deducted TDS for a non resident, that non resident does not have PAN, Since Form 16A has to be issued online from teh FY 2011-12, & we cannot download it online for non resients since they don't have PAN, what is the procedure for issuing Form 16A for the non residents having no Valid PAN?

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12 Replies

kanagaraj (CHARTERED ACCOUNTANT) (793 Points)
Replied 10 February 2012

Viji,

You must get the PAN first and then file a revised TDS return and issue the FOrm 16A. If there is no PAN you have to deduct at the maximum of 20%

Ravishankar K (Accountant) (461 Points)
Replied 10 February 2012

Hope you must have deducted tax @ 20% as mentioned by Mr.Kanagaraj. To avoid such mistakes or rather corrections better to ask the PAN No of the Party to whom the payment is to be made right while placing the Purchase Order / Service Order itself or before making payment atleast you ensure you have valid PAN Copy.

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Vijayalakshmi (Articled Assistant) (26 Points)
Replied 10 February 2012

Thank you very much for the reply

The thing is since the deductee is a non-resident and has no PAN I have decucted TDS @ higher rate ie @ 20%, . But my query regarding this is how to issue FORM 16A to him. Because now that the issue of FORM 16A is to be done online & to download such forms we need to furnish PAN details of the deductee, now since the non-resident of whom the TDS is done does not have PAN, how can i issue the TDS Certificate to him. Can i issue a Manual TDS certificate in the sitiuation? If the manual is issued will it be accepted?

Plz Reply.

kanagaraj (CHARTERED ACCOUNTANT) (793 Points)
Replied 10 February 2012

Since you paid the higher tax for not having any PAN you are not supposed to issue form 16 A. As PAN is not submitted the deductee is not entitled for any claims. So, no need to issue the Forms.If he is very particular for that form first of all ask him to get PAN. This will help him also to get DTAA benefit in that country, if applicable

Kiran Kumar M (CA) (29 Points)
Replied 11 February 2012

As Mr.Kanagaraj rightly said, there is no need to issue Form 16A and it is not possible as well. You cannot issue a manual certificate for this situation. If he insist for the same, then he has to apply and get the PAN first then only it is possible.

Rajesh Kothari (CEO) (74 Points)
Replied 13 February 2012

Originally posted by : kanagaraj
	Since you paid the higher tax for not having any PAN you are not supposed to issue form 16 A. As PAN is not submitted the deductee is not entitled for any claims. So, no need to issue the Forms.If he is very particular for that form first of all ask him to get PAN. This will help him also to get DTAA benefit in that country, if applicable

Does it mean that non-resident party (who has agreed to pay Withholding Tax-WHT/TDS in India and is not having PAN number in India) is not entitled for claiming 20% WHT/TDS in his country under DTAA? This does not seem logical. If yes, then what's use of having DTAA? And also, why any overseas party should agree to pay WHT/TDS in India? If it is not allowed to get TAX deduction done in India for payments due to him, why will he ever agree to get it deducted by an entity based out India.

Kiran Kumar M (CA) (29 Points)
Replied 13 February 2012

If he get the PAN then he is eligible for all the benefits of WHT/TDS. Income tax department is not aginst to the DTAA provisions but it require the identity of the person claiming the refund or benefit through PAN

Rajesh Kothari (CEO) (74 Points)
Replied 13 February 2012

Originally posted by : Kiran Kumar M
	If he get the PAN then he is eligible for all the benefits of WHT/TDS. Income tax department is not aginst to the DTAA provisions but it require the identity of the person claiming the refund or benefit through PAN

I agree. But my point is different. Question here is 'how does a non-resident entity whose WHT/TDS is deducted by an Indian person get his Income tax reduced by claiming credit this WHT/TDS deducted in India? Unless Indian entity gives him TDS certificate he can not claim tax in his country. Isn't it?

So, it does not look logical to me that if full WHT/TDS is deducted from a payment to a non-resident (because of not having PAN no in India) non-resident is denied TDS certificate in Form-16.

Sanjay Kevadiya (Proprietor) (21 Points)
Replied 13 March 2012

It means any non-resident not provide PAN are not eligible for claim under DTAA. It is practicly not possible all non resident apply PAN. My question is what is soluation for get DTAA benefit for such non resident.

Banwari kyal (Seeker) (31 Points)
Replied 28 August 2012

Is there any departmental clarification on this issue for how to proceed?

CA Krunal (Deputy Manager -Adani Ent) (262 Points)
Replied 26 October 2012

Dear Banwarilal,

Your point is valid. There is no restriction in the Income Tax Act that if there is no PAN no tax credit is allowed.

Actually TIN-NSDL should facilitate generation of TDS for non PAN deductee as well. However if that is not possible, we have to issue manual certificate as we cant deny to issue certificate.

You can refer following link https://www.thehindubusinessline.com/industry-and-economy/taxation-and-accounts/article3390908.ece

monica gopalakrishnan (student) (42 Points)
Replied 19 June 2016

TDS on sale of immovabale property by non resident to resident (the buyer is resident) under which challan and section can use for remit the TDS amount

whether challan 26QB or 281 Pls Guide me