We need to make commision payment to our agents in Nepal. The agent (foreign co status) has no presence in India whatsoever and no Indian PAN. Do we need to deduct TDS and at what rate?
8 Replies
Amir
(Learner)
(4016 Points)
Replied 06 January 2010
Dear Ash,
Plz clarify commission for what??since TDS rates are based on type of payments as per DTAA with NEPAL..
Bimal Thacker
(Proprietor)
(767 Points)
Replied 06 January 2010
Please go Through the circuler issued about non deduction of Tax, However some details required in your case about the transaction for which commission has been given
Ash
(Manager)
(30 Points)
Replied 06 January 2010
Goods were supplied to a governement organization in Nepal and we need to make commission payment to our agents in Nepal. This is there share of the profit on the transaction and also payment which our agent in Nepal will be making towards freight and transportation.
Debashis Mandal
(Business & Tax Consultancy)
(341 Points)
Replied 06 January 2010
Respected Friend Ash,
It is u/s - 194H ie 10% & 1% Surcharge, Deduct TDS without quoting PAN, otherwise your expenses will not be deducted under IT Act 1961, Also Refer Circular No.619 dated 4.12.1991, Deduct the TDS only on Commission & not on expenses.
Thanks
Debashis
Bimal Thacker
(Proprietor)
(767 Points)
Replied 06 January 2010
Dear Ash
There is also some details neeeded like whether there is any contract? where the commission will be paid etc. However Kindly refer the Board circuler no. 786 dt. 2.2.2000. Hope it will clerify. also it is supported by CIT v George Willianson (Assam) Ltd. 2008 305ITR (AT) 422 Gauhati
According to above circuler Where a non resident agents operates outside the country, no part of his income arises in India. Further since the payment is usually remitted directly abroad, it cannot be held to have been received by or on behalf of the agent in India. Such payments are therefore, not taxable in India. Consequently, no tax is deductible at source under section 195 in such case.
Ash
(Manager)
(30 Points)
Replied 06 January 2010
Dear Debashis,
For overseas commission payments will we use section 195(i) rather than 194h.
195(i) has TDS rate as 40% See link below
It is all very confusing.
Ash
(Manager)
(30 Points)
Replied 06 January 2010
Dear Bimal,
we use to make payments u/s 195 in the past and not deduct any TDS.
No longer the case can be as
Please read the above news.
Bimal Thacker
(Proprietor)
(767 Points)
Replied 06 January 2010
Dear Ash,
Thanks for Updation of recent judgement. However in our country various High Court has given contratory judgemnt on various issue. No one judgemnt is permanent, issue will going on.
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