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TDS QUERY FOR PAYMENT TO NON RESIDENT

priyansh jain (3 Points)

19 October 2021

Invoice raise from foreign company (Ireland)

Ship to foreign company (us)

Bill to Indian company

Ship to and bill to company are not related companies

Payment has to be made by Indian company to Ireland company.

Whether tds would be deducted?

Service is in royalty nature

Remitter Indian company
To Ireland company.

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2 Replies

Kev Men (788 Points)
Replied 19 October 2021

If the foreign company has permanent establishment (PE) in India, then tax rate will be normal tax rate (Section 44DA).

If the foreign company does not have PE in India, then tax rate will be 10% (section 115A).

The foreign company will have to furnish the name, email-id,contact number, address outside India, Certificate of residence of Ireland (if any), Tax identification no. of Ireland/ unique number (CBDT notification related to Sec 206AA). If these are not furnished, then TDS rate at 20% to be considered.

The TDS will have to be deducted under section 195...since payment is made to foreign company, surcharge and health and education cess will also need to be considered for the applicable rate. Also if DTAA rate is available, then lower of DTAA rate or rate in force to be considered.

In short, TDS will need to be deducted in the above case.

priyansh jain (3 Points)
Replied 19 October 2021

Income by way of royalty payable by a Resident shall be deemed to accrue or arise in India except where the royalty is payable in respect of any right, property or information used or services utilized for the purposes of a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India.

section 9(1)(vi)

any relation?

I want to know can Indian company can pay on behalf of that usa company ?