Tds on software support service

Yes, TDS is to be deducted u/s 195 as per DTAA or I.Tax which is beneficiary to supplier. If PAN not available then 20% or as per Rate whichever is higher.

Hi Sai,

If Foreign company is having PE in India, then TDS needs to be deducted under article 12 of the US DTAA agreement @ 15% provided foreign company submitted their TRC in USA and also PAN in India. Following are the implication :

1) Foreign company doesnt provided TRC of USA and PAN in India : DTAA benefit cannot availed. Therefore, TDS rate would be 25% + SC + EC (Refer enclosed sheet)

2) Foreign company doesnt provided TRC of USA but having PAN in India : DTAA benefit cannot availed. Therefore, TDS rate would be 25% + Surcharge + Edu. Cess (Refer enclosed sheet)

3) Foreign company provided TRC of USA but not having PAN in India : DTAA benefit can be  availed. However due to non availability of PAN, TDS rate would be 20% + Surcharge + Edu. Cess

4) Foreign company provided TRC of USA and also having PAN in India : DTAA benefit can be  availed. TDS rate would be flat 15%

Please refer article 12 of the India - USA DTAA agreement for further details.

If foreign company doesnt have PE in India, No TDS applicable.

Thanks and Regards,

Manoj B. Gavali

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