withholding tax

[Guest]

Our company who is resident in India has to remit US $10,000 to a Company who is resident of Vietnam for attending seminar over there [Seminar with topic related to advertisement].  Plz suggest if our company is required to withhold tax in India and if yes than at what rate.  Plz also give relevant provision of Income tax Act and DTTA

 

[Anuj Gupta]

No TDS is required, provided the foreign company provides the TRC and NO PE certificate.

 

Anuj

[Praveen Mittal]

thx dear Anuj for your response.  Can you plz elaborate the provisions of law in this regard as to why this should not be considered as fees for technical services.  Secondly what will happen if the foreign party is resident of say Pakistan with whom we don't have DTAA

 

[Anuj Gupta]

If the seminar is providing a training on some specific topic then it may be covered under FTS, but if the seminar is of general nature then it is not of nature of FTS.

 

for Pakistan , income tax rates shall apply.

 

anuj

9810106211

[Praveen Mittal]

thx a lot again dear.  as mentioned in my earlier query the Seminar is with topic related to advertisement.  Plz give your view point if the same can be considered as provision of training with some specific topic or not.  Further, earlier you have pointed out that in case if TRC is provided then no TDS, would you mean that this income is otherwise taxable in India but because of DTAA it would not be taxable and for claiming benefit of DTAA, TRC is required?  If that be the case then under which provision this income would be deemed to be earned in India as Section 9 talks about business connection for an income being deemed to be earned in India

 

would be obliged if you plz give your view point by elaborating the same in detail

 

[Anuj Gupta]

Income Tax Department shall always consider the same as FTS , it even calls commission as FTS.

In Income Tax Act the terms are very widely drafted but under DTAA the scope and application of particular clause is normally clearly defined and is limited in scope.

 

 

[JAYARAMAN M]

u r making advertisement in seminar to be conducted at Vietnam.  the income will accrue in Vietnam  AS SOURCE BASED TAXATION.  AND THE COMPANY IS TAXABLE ONLY IN THAT COUNTRY FOR THE INCOME RECEIVED.  HENCE IN MY OPINION 195 IS NOT APPLICABLE.   ONLY CHECK THE DTAA     WHETHER VIETNAM WILL SUPPORT SOURCE BASE TAXATION.

AI Summary

Withholding tax on seminar payments depends on whether payments are Fees for Technical Services and treaty protections apply. Obligation to withhold hinges on whether the seminar payment constitutes Fees for Technical Services or a non technical advertising/general seminar. A valid Tax Residency Certificate and absence of a Permanent Establishment under a pertinent Double Taxation Avoidance Agreement can prevent Indian taxation; without a treaty, domestic withholding rules apply.