Non disclosure of pan - higher rates - DTAA applicability

[madhavvan n]

As per Section 206AA it is mandatory for Non residents to quote PAN does this cover all ( ie non resident indians, non resident companies and other non residents) If PAN is not quoted by Non resident then tds at higher of rates will have to be applied. If there is a DTAA with the country in which non resident is located and the rate as per DTAA is lower then which provision will prevail will DTAA prevail or rates as per Section 206AA will have to be applied. readers views are solicited

[HIMANSHU JARIWALA]

IF RATES OF DTAA IS BENEFICIAL THEN RATES AS PER DTAA WILL PREVAIL AGST. IT RATES.

[Rama Krishana]

Yes, if non-resident is not having PAN, the higher rate of withholding tax shall be levied.

[Surender Gupta]

See the provisions of section 206AA are overriding over all other provisions of the Act. DTAA provision are effective under the provisions of section 90. But the provisions of section 206AA is having overriding effect over section 90 also.

[CA UMA KOTHARI]

Please see section 139A which says about persons who need to apply and obtain PAN. In case a person is not required to obtain PAN under S. 139A, it is is still advisable for him to obtain PAN, particularly when he is to receive any sum of money which is subject to TDS. otherwise the person paying such sum will be justified to deduct tax at higher rate as specified in S. 206AA.

[Anuj Gupta]

As per sec 206AA TDS at higher rate is deductible only if the income is chargeable to tax in India. Hence kindly put the sum that you are paying to foreign party under the lens of sec. 4,5,6 and 9 then you will get the answer.

AI Summary

PAN requirement for non-residents may trigger higher withholding unless the DTAA rate applies where income is taxable in India. Non-resident payees must quote a Permanent Account Number and, if PAN is not furnished, payors may deduct tax at a higher withholding rate under Section 206AA. While some respondents contend the lower DTAA rate should prevail, others maintain Section 206AA overrides treaty relief; however, higher withholding is only applicable where the income is chargeable to tax in India, making the domestic taxability analysis of the payment determinative.