Applicability of TDS on commission to foreign agents paid outside india.

[satbir singhwahi]

circular no.7/2009(f.no.500/135/2007-ftd-I) dt 22.10.2009 has withdrawn circular 23 dt 23.07.1969, 163 dt 29.05.1975, 786 dt 7.02.2000. in view these whether commission to foreign agents outside india can be paid , whether tds is applicable, what one is to comment in form 15CB.

[CAGOPALJI AGRAWAL]

Commission can be paid to foreign agents without TDS if these agents have not PE in India. IN form 15CB, the rate would be NIL

[ASHISH DESAI]

what would be the position in view of the recent AAR ruling in case of  SKF Boilers and Driers Pvt.Ltd., will TDS be made applicable?

[Anuj Gupta]

Case law of AAR SKF Boilers has litlle persuasive value as the said case is applicable only the applicant and the Income Tax Department.

There is case of Toshoku Ltd (SC) and Eon Technology P.Ltd.(DHC) on the matter, and they have persuasive value over the SKF case.

AI Summary

TDS on commissions to foreign agents may not apply where agents lack permanent establishment, altering withholding obligations. Commission payments to foreign agents are not subject to tax deduction at source where the agents do not have a permanent establishment in India, and Form 15CB should indicate a nil withholding rate. Administrative rulings may have limited applicability to parties, while judicial decisions on analogous facts can carry persuasive weight when assessing withholding obligations.