Rate of tds on prof fee paid a non resident

Dear Members,

We are a construction engineering company (Pvt Ltd) and we are hiring \ retaining the services of a Architect (UK national) for next two years for a fixed monthly fee. He will based out India and will render routine architectural services for our various projects. During FY 2011-12 his stay in India will more that 182 days & this is his first visit to India.

Query is :

01. What is the rate of TDS applicable for these kind of payments ? ( as per DTA A or Normal rates)

02. Does these services come fall under FTS ( fees for technical services) as defined in Indo-UK DTAA ?

03. If these services are not FTS, how the UK national is taxed for FY 2011-12, whether as normal business income or U/s 44DA ?

04. Would section 194J be applicable as UK national is going to stay for more than 182 days during FY 2011-12 ?

Regards

Sadanand.

01. What is the rate of TDS applicable for these kind of payments ? ( as per DTA A or Normal rates)

If the person becomes a resident for 2011-12, then for the period the architect is non resident, the TDS should be decucted @ 10.51% and when he becomes a resident then TDS should be deducted @ 10%. But please kindly check whether payment and invoice is being raised in individual name or firm/LLC or Co. name by the foreign architect.

02. Does these services come fall under FTS ( fees for technical services) as defined in Indo-UK DTAA ?

Yes

03. If these services are not FTS, how the UK national is taxed for FY 2011-12, whether as normal business income or U/s 44DA ?

N.A..Also 44DA doesnot cover normal businees income, it covers FTS paid to foreigner who has a permamnet establishment or fixed place of business in india .

04. Would section 194J be applicable as UK national is going to stay for more than 182 days during FY 2011-12 ?

Yes.

Anuj

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