Tax implication on hire of foreign professional

First of all you need to take GST registration, TAN registration for TDS deduction u/s 195 in the given case. For any business related payments by individual, proprietor need to register themselves under TAN for TDS deduction u/s 195. TDS rate shall be ranging from 10.4% to 10.92% depending upon the transaction value per payee in a year (rate changed due to surcharge rate, whereas base rate remain constant i.e. 10%) or the rate prescribed under DTAA whichever is lower. You also need to file TDS return on quarterly basis and issue TDS certificates through TRACES if payee has PAN registered in India. If payee doesn't have PAN registered in India, prepare a manual TDS certificate and share it with payee for WHT credit in their resident country.

In case DTAA is silent on TDS rate on FTS, please check whether any other close nature of transaction to FTS has been covered under respective DTAA and deduct TDS accordingly. Generally, tax office is very aggressive on TDS compliance and hence, any non deduction of TDS just because TDS rate not defined under DTAA shall trigger litigation point and tax office may jump on the same with all provisions. Hence looking at the TDS amount and cost of litigation if tax office issued negative order, it is always advisable to deduct TDS in such case to be on safer note. If it's a bigger order, you can always take CA's advice on applicability of WHT provision.

Regards,

Manoj

Thank you very much sir for the reply. Do I need to file Form 15CA /15CB also? If yes, do I need to file every time before remittance or quarterly or yearly? Please let me know.

Thank you.

Yes, you need to file Form 15CA and Form 15CB for each of the tranasaction. If aggregate remittance in the year per payee is less than INR 5 lakhs, then you need not to file Form 15CB for that particular remittance.

Regards,

Manoj

Thank you very much.

When your client, an individual engaged in game development, outsources specialized technical services to an individual in Brazil (or any other country), TDS (Tax Deducted at Source) may be applicable depending on the nature of the services and the Double Taxation Avoidance Agreement (DTAA) between India and Brazil.

Tax Implications:

1. TDS on Technical Services: As per Section 195 of the Income Tax Act, if an Indian resident makes a payment to a non-resident for technical services, they must deduct TDS at the applicable rate under DTAA or as per Indian tax provisions (whichever is higher).

   • The rate for technical services is typically around 10% under the DTAA unless the nature of the services qualifies for a different rate.

2. No Separate Provision: In the context of Brazil, the term "No separate provision" under the DTAA generally means that there isn't a specific provision for technical services under the Brazil-India DTAA. Therefore, the default rate of TDS for fees for technical services would apply, which is usually 10%.

3. TDS Deduction: Your client will need to deduct TDS on the payment made for the technical services. The payment will be made to the non-resident individual, and the TDS must be remitted to the government.

4. Form 15CB: For payments above the threshold, a Form 15CB (issued by a Chartered Accountant) will be required to confirm the applicable TDS and ensure compliance.

5. Filing Form 15CA: Your client will also need to file Form 15CA with the bank to report the payment.

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