Recent Applicability of PAN to foriegn co for TDS u/s 195

Rahul Gupta (Project Controller ACA MBA(Fin.))   (8014 Points)

17 May 2010  

Hello All,

Following  is the Amendment recently made in the union Budget 2010.

"In order to strengthen the PAN mechanism, it is proposed to make amendments in the Income Tax Act to provide that any person whose receipts are subject to deduction of tax at source i.e., the deductee, shall mandatorily furnish his PAN to the deductor failing which the deductor shall deduct tax at source at higher of the following rates:


(i) the rate prescribed in the Act;

(ii) at the rate in force i.e., the rate mentioned in the Finance Act; or

(iii) at the rate of 20 percent

The above provisions will also apply in cases where the taxpayer files a declaration in form 15G or 15H (u/s 197A) but does not provide his PAN. Further, no certificate under section 197 will be granted by the Assessing Officer unless the application contains the PAN of the applicant."


My discussion topic is the applicability of the above provisions to a Foreign Company. Is this provision make the Foreign Co. to cumpulsory take PAN in order to avoid the TDS @ 20%.? If so, what will be happen in case the taxes are more than 20% i.e in some cases the TDS to be dedcuted is 40%.?


There is a query by one of our members in the Expert section. Some of us give our opinions on it and also have some discussion on it. The link is given below for the answers given by the Experts.

I am postiong it here in case any of you can throw more light on it.