TDS on payment made to non resident for 'sample analysis charges' (testing Charges) -withholding tax

[ASHISH DESAI]

an Indian company is making payment to a German company towards 'sample analysis charges'(testing Charges), so as to make the particular indian product acceptable in European Countries.based on their parameters,if this product satisfies their technical specification,based on this 'chemical analysis report'they can purchase this product from us. whether this payment attracts provisions of Section 195, Article 12 of DTAA between India & Germany? or can we take benefit of a TMI-31936, as these services were rendered & will be utilised abroad?

[Anuj Gupta]

Mr.Harsha, Yes this payment if made to a non resident attracts provisions of section 195.Also is your Company paying charges for earning income outside India.If the answer is yes then the case law reported by you may of some help, but there are other direct case laws which will help you.

AI Summary

Payment for Sample Analysis to German Firm Falls Under Section 195, DTAA Article 12 Applies for Tax Withholding An Indian company is paying a German company for sample analysis charges to ensure its product meets European standards. The query is whether this payment is subject to Section 195 of the Indian Income Tax Act and Article 12 of the Double Taxation Avoidance Agreement (DTAA) between India and Germany. The response indicates that such payments to non-residents do fall under Section 195. If the payments are for earning income outside India, a referenced case law might be beneficial, though other direct case laws could also provide guidance.