Tds on payment of testing charges to overseas

[abhay pandey]

Dear All

I want your view on below matter.

We are making payment of testing charges to our overseas vendor of Germany.

As per latest amendment in section 195 fee for technical service where the agreement is made on or after April 1, 1976, tds rate @ 25.75% will be applicable.

As per DTAA between India and Germany TDS will be deducted @ 10%

Please clarify me that at which rate TDS should be deducted 10% or 25.75% as we have not any agreement with the party.

The agreement clause mention in section 195 related to agreement between two parties or for DTAA date.

In my view its for agreement between parties not .

Kindly provide your views.

AI Summary

Clarification Sought on TDS Rate for Payments to German Vendor: 25.75% Under Section 195 or 10% Under DTAA? A user inquired about the appropriate tax deduction at source (TDS) rate for payments made to an overseas vendor in Germany for testing charges. They referenced a recent amendment in section 195, which stipulates a TDS rate of 25.75% for technical services agreements made on or after April 1, 1976. However, under the Double Taxation Avoidance Agreement (DTAA) between India and Germany, the TDS rate is 10%. The user sought clarification on which rate to apply, noting the absence of a formal agreement with the vendor. A respondent asked if the issue was resolved, indicating the discussion was ongoing.