TDS RATE ON TECHNICAL SERVICE FEE PAID TO FOREIGN CO.

[satbir singhwahi]

LOCAL COMPANY IS PAYING FEES FOR TECHNICAL SERVICES TO FOREIGN COMPANY HAVING PE IN INDIA. KINDLY GUIDE THE TDS RATE APPLICABLE ON SUCH PAYMENTS.

[DR.MARIAPPAN GOVINDARAJAN]

10% is applicable.

[Yash Jain]

Dear Sir,

Please refer the DTAA provision of the country in which foreign company is situated. If it mentions that tax is deductible in case foreign company has PE in india, then check the rate.

In your case as the company is foreign company having PE in india, then tax is deductible @ 40%, as foreign company having presence in india are taxed at 40%. (Deduct by way of reverse working)

Regards

AI Summary

TDS on technical service fees: check DTAA and presence of permanent establishment to determine applicable withholding rate. When a local company pays technical service fees to a foreign company that has a permanent establishment (PE) in India, the withholding obligation and rate depend on the DTAA for the foreign company's residence and on recognition that income attributable to the PE is taxable in India; advisers recommended verifying DTAA provisions and applying the appropriate withholding mechanism, including reverse charge computation where applicable.