Cross border leasing

[Sreehari K]

Hi Team,

We are an Indian pvt ltd company and are planning to lease an equipment from USA for 10 years. We will be paying monthly XXX amount as monthly rent to US company and this will be in US dollars. Please can you let me know if we need to

1) Get prior approval from DGFT, RBI

2) Will the rent paid to the USA company be taxable. What will be the TDS rate and does this come under the double taxation agreement. Will this be considered as royalty, technical fees, other income under double taxation?

Regards,

Sreehari

​78128 05670

AI Summary

Indian Company Seeks Clarity on RBI, DGFT Approvals and TDS for US Equipment Lease under India-US Tax Treaty An Indian private limited company is planning a 10-year equipment lease from a US company, with monthly rent paid in US dollars. The company seeks clarity on whether prior approval from the Directorate General of Foreign Trade (DGFT) and the Reserve Bank of India (RBI) is needed. They also inquire about the tax implications, specifically if the rent is taxable, the applicable Tax Deducted at Source (TDS) rate, and how it fits under the India-US Double Taxation Agreement. A respondent suggests that approval is necessary and confirms the rent is taxable. The company is researching further on TDS specifics.