The payment is for Independent Personal Service (Consulting) - From a Pvt Ltd Company in India to a independent personal in Autstralia, Indian but having permanent residence there.
Article 14 of DTAA states
ARTICLE XIV - Independent personal services - 1. Income derived by an individual or a firm of individuals (other than a company) who is a resident of one of the Contracting States in respect of professional services or other independent activities of a similar character shall be taxable only in that State unless :
(a) the individual or firm has a fixed base regularly available to the individual or firm in the other Contracting State for the purpose of performing the individuals or the firms activities, in which case the income may be taxed in that other State but only so much of it as is attributable to activities exercised from that fixed base; or
(b) the stay by the individual or, in the case of a firm, by one or more members of the firm (alone or together) in the other Contracting State is for a period or periods amounting to or exceeding 183 days in a year of income, in which case only so much of the income as is derived from the activities of the individual, that member or those members, as the case may be, in that other State may be taxed in that other State.
Recent Supreme court judgement - TDS on foreign remittance deductible only if tax is assessable in India
As the independent personal is a permanent resident of Australia, there was no physical visit to india so the income is not chargable in India according to DTAA. As the tax is not assessable in India, no TDS need to be deducted as well.
Is my conclusion correct?
CAclubindia
