Applicability of Witholding Tax in case of import, if foreign company has PE in India

[VaibhavKumar Jain]

Dear Members,

Request for your kind views, with case laws or section reference, for Applicability of Withholding Tax in case of import of material, if foreign company has PE in India and it has not provided lower deduction certificate u/s 197(1) of income tax act.

Should we deduct the tax at 40%(plus appl. surcharge and cess)?

In such case, It will be hardship for foreign company.

Thanks and Regards

Pankaj Tirthani

Bharat Oman Refineries limited

Mob - 9222224099

[DR.MARIAPPAN GOVINDARAJAN]

In my view yes.

[VaibhavKumar Jain]

Dear Sir,

Thanks for your kind reply. Can I get some section reference, case law or any other reference.

Pankaj Tirthani

Bharat Oman Refineries limited

Mob - 9222224099

[Ganeshan Kalyani]

In my view, TDS is not deductible in case of import of material.

AI Summary

Withholding tax on import payments: whether TDS applies when foreign supplier has PE but no lower deduction certificate. Applicability of withholding tax on payments for imported materials to a foreign supplier with a permanent establishment in India is disputed where the supplier has not produced a lower deduction certificate; one view advocates TDS in that situation while another contends TDS is not required for import of materials, and parties note potential hardship from mandatory deduction absent a certificate.