TDS Deduction when vendor is outside India, but have PAN and GST

Basically DigitalOcean is our vendor and we need to deduct TDS. But since the service provider is US based, we are confused about which section the TDS should be deducted.   TDS @ 10% for technical services under section 194J or any other section as the vendor is outside India.

Pl clarify,

Does your supplier do any activity in India in relation service provided to you ?

Does supplier has PE in India?

Yes Supplier provide Web Hosting servers to India.
Supplier is a US company and doesn't have any PE in India. The have provided No Permanent Establishment declaration.  

But supplier has a PAN number provided by Indian.

In my opinion,

If supplier provides services from US and does not have PE in India, its income is not taxable in India hence TDS is not applicable.

Other experts, pl comment.

Dear sir,

Can you please help me with one more question, mujhe director ka TDS deduct kar ke government ko jma krna hai, to kya mujhe uska remuneration ko salary ki trah slab rate ke according calculate kar ke deduct krna hoga or ITNS 281 me jma krna hoga ya fir mujhe direct directors ke total remuneration pe 10% TDS deduct kar ke ITNS-281 me section 194j ke teht jma krna hoga,

Please help me, sir.

Dear Vikram, From your query, I understand that they hold a PAN number. Probably they should have a permanent establishment in India. How the invoicing is done?

Having an Indian PAN and GSTIN does not automatically make a foreign vendor a resident for income tax purposes. The TDS treatment depends on the vendor residential status under the Income Tax Act, not just their PAN or GST registration.

For TDS under Income Tax:
- Section 195 applies to payments to non-residents ,  deduct at the rates prescribed or at the lower rate available under a DTAA with that country
- If the vendor has a Permanent Establishment (PE) in India, different sections may apply (192/194C/194J depending on income type)
- The vendor having an Indian PAN helps in TDS compliance but does not change the applicable section

For claiming DTAA benefit: obtain a Tax Residency Certificate (TRC) from the vendor and a self-declaration in Form 10F, then apply for a lower deduction certificate under Form 13 if the rate is still high

For GST: if the vendor has an Indian GSTIN, they are treating the supply as made from India. You can claim ITC normally on their invoice. RCM may still apply on certain notified services under Section 5(3) even if the vendor is GST-registered.

Key step: confirm residential status first, then apply the correct TDS section and rate.

This [Form 15CA-15CB foreign remittance TDS guide](https://taxgarden.in/blog/form-15ca-15cb-form-145-146-foreign-remittance-tds-compliance-india-2026) covers the documentation and procedure.