Tds rate under section 195

If receiver (beneficiary) provides Tax Residency Certificate(TRC) issued by the government of his country then you can deduct TDS as stated in DTAA(at a lower rate) otherwise you have to deducted as per Sec 195 of Income tax act 

IF we have tax residency certificate and not P.E certificate.

then can we over rule  section 206AA of income tax act.

hi,

please refer to circular of income tax department Circular No. 333, dated 02-04-1982 ,which state that ADT can prevail over domestic laws.

correct me if i am wrong

This is a very old Circular. Further, Circular can not overrule the provisions of the Act under which it has been issued.

Hence, in my opinion, PAN is compulsory.

Originally posted by : Sarath.M.G
	Tax is deductibe at source u/s 195 at the rates specified in sec 195 or the rates specified in ADT(Avoidance of Double Taxation) agreements which ever is lower[sec 2(37A)(3)]

I think that is correct.

Originally posted by : CA Sachin D Jain
	Sec 206AA starts with the word "notwithstanding anything", which gives it overriding effect over other sections of the income tax act, for e.g. sec 195, 90, etc. Hence, if PAN is not available tds has to be deducted at least at the rate of 20.60% as per sec 206AA, regardless of availability of TRC and No P.E. certificate.

The word "Notwithstanding anything" overrules definition provisons also. Further, Sec. 206AA was introduced in Income Tax Act, 1961 after Section 2(37A)(3), which is also one of the evidence of giving Section 206AA overruling effect over section 2(37A)(3).

Hence, again in my opinion, PAN is compulsory as per Section 206AA which overrides section 2(37A)(3).