Urgent - Foreing Remittance - TDS u/s sec. 195

Dear colleagues,

Please throw some light on the doubt I am having regarding TDS u/s 195.

1-Will the remittance made towards INSURANCE PREMIUM FOR ASSSETS in India, to the insurers in US and UK be considered as income accruing/deemed to be accruing in India for them (they dont have a PE in India)?

2-Will such remittance attract TDS u/s 195? Or should they be considered u/s 194C as payment made to Foreing companies - TDS @ 2.175% (see WIRC reference manual 2009-10, TDS section)?

3-If u/s 195, then should the rate of TDS be 40%+Surcharge and Cess - the one for other incomes?

4-Same questions as mentioned in 1-3 for Rental payment remittances - movable assets being in India, but belonging to companies in US.

Awaiting suggestions and guidances.

Thanks.

Replies (1)

Dear Dilen,

 

Please find below answer to your questions;

 

1) IRDA/FEMA puts restriction on Foreign insurer to insurer properties of/in India. Incase if foreign Insurer enter into such transactions, the Income of Non Resident shall be taxable in India and Section 195 shall come into action.

 

2) Yes, as explained above.

 

3) Rate of TDS shall be 40% + Surcharge (if applicable) + additional surcharge (alwayz applicable). I have refered TDS rate section of WIRC Ref Manual 09-10 and m surprised about its content.

 

4) Regulation FEM (Acquisition and Transfer of Immovable properties in India) 2000,  set restriction on acquisition of Immovable properties by Foreign Companies/Foreign Nationals. Irrespective of restriction/without RBI permission if Foreign Company enters into Rental transaction, the rental Income shall be taxable in India and TDS shall be applicable at the rate mentioned in reply "3".

 

Plz suggest/advice if m wrong.

 

Regards

Juzer

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