TDS rate if payment to NRI in UAE ( Commision paid on room rent or any other sale)

[ROHIT SHETTY]

TDS rate if payment to NRI in UAE ( Commision paid on room rent or any other sale). 1)Payment made directly to UAE parent company and as per the agreement and not to any permanent establishment in INDIA . 2) Whether this income acuree in India or UAE

[Rama Krishana]

It is nature of income which is to be decided first. Whether that income is taxable in India. If the service has not been rendered in India, there is no P/E in India, the amount paid is related to activities undertaking and performed outside India, as per my knowledge and general terms, can be taxable in India and hence no TDS should be deducted in India. But, sometimes there may be exceptions which may be read in the relevant treaty between the two countries (DTAA) and terms of the agreement carefully.

[ROHIT SHETTY]

Thanks for the reply,if the room is located in India than the service will acrue in India

[Anuj Gupta]

Rohit kindly be clear of question for which you need the answer.Commission for sale or room rent ? Kindly specify the exact nature of payment.All other answers will follow if you frame the question correctly.

[ROHIT SHETTY]

1)hotel located in India. 2) Payment made to party outside India i.e UAE for promoting sales only when a client of party(UAE) sa said above comes to India & stay at said hotel. 3) Commision payable on sales to UAE party by the Hotel located in Inida. 4) TDS applicable if yes than at what rates , a)assuming there is PE b) assuming there is no PE

[Surender Gupta]

I think a business promotion activity outside India, by a person outside India, not having any P/E in India, mere receiving amount from India for services rendered outside India can not make such transaction taxable in India.

AI Summary

Tax withholding on cross-border service fees depends on presence of permanent establishment and source of income. Whether TDS applies to commissions paid from an Indian hotel to a UAE nonresident depends on the source of income and presence of a permanent establishment (PE) in India. Payments for services performed outside India by a nonresident without a PE are generally not Indian-sourced and typically not subject to TDS, whereas services rendered in India or through a PE may produce Indian-sourced business income subject to withholding. Applicable DTAA provisions and the factual service nexus to India must be examined to determine withholding obligations.