Requirement to deduct TDS by Indian conapy - Impact of amendment in finance bill 2010

[madhavvan n]

when is tds required to be deducted by an indian company when payments are made to all non residents, does it require that the non resident should have a PE in India and the nature of payment should constitute income in hands of non resident. how to define income does any payment arising for services rendered in india by nonresident enough for deduction of tax. as finance bill 2010 contains a provision wherein the only criteria for the purpose of accrual of income as per sec 9 is that the services should have been utilised in india and the nonresident can render the service from any where in the world. does this amendment impact deduction of tax at source under Section 195 readers for your views

[Rama Krishana]

The question raised by you is a question which everybody must keep in his mind while making payment to non resident. The provisions of Income Tax are become more and more complex day be day and if a person liable to deduct TDS, he would face severe consequences. As per section 195, any sum which is taxable in India is subject to TDS in India. Therefore, every person liable to make payment to a non resident has to put himself in the capacity of non resident and decide that whether amount payable to non resident is taxable in India or not. Since the issue of tax ability of a transaction is proprietors issue, the decision related to one traction may not be relevant for another transaction.

AI Summary

Finance Bill 2010: TDS on Payments to Non-Residents Without Permanent Establishment Under Section 195 Explored. A discussion was initiated regarding the requirement for Indian companies to deduct Tax Deducted at Source (TDS) when making payments to non-residents, particularly in light of the Finance Bill 2010. The query focused on whether the non-resident must have a Permanent Establishment (PE) in India and if the payment constitutes income for the non-resident. The amendment suggests that services utilized in India, regardless of where they are rendered, may trigger TDS under Section 195. The response highlighted the complexity of tax provisions and emphasized the need for careful assessment of each transaction's taxability.