taxability of Technical fees to korean directors

[HIMANSHU JARIWALA]

company wants to pay technical fees to director of company who is korean resident. He provide technical guidance/support for the entire operation of the plant from korea only and visit the plant in india only once in a year. Is any tax is required to be paid in india as per Income tax act and considering the provisions of DTAA with korea. Please advise....

[Anuj Gupta]

Technical fees as provided under section 9(i)(vii)shall be leviable in the instant case.Also kindly provide more facts like whether such director is resident in India or not . Also the provisions of India- Korea DTAA needs to be studied.

[NANDKUMAR SAGWEKAR]

If your company has received services in India from abroad and you have made the payments , I think you have to pay the service tax ANAND SHEMBEKAR CELL 9209904370

[Rama Krishana]

After an amendment to section 9 of the Income Tax Act, 1961, the amount paid for fees for technical services (FTS) shall be treated as deemed to accrued or arises in India and therefore liable to tax in India. However, since the provisions of DTAA have the overriding effect, you need to consider the same also. In my view the rate of with holding tax is 15% as per DTAA with Korea in this case.

AI Summary

Technical fees taxability: cross-border technical services to a nonresident director may attract source-based tax and DTAA withholding. Payments for technical guidance by a Korea-resident director who performs services from Korea but visits India infrequently are treated as Fees for Technical Services deemed to accrue or arise in India and thus prima facie taxable; however, the India-Korea Double Taxation Avoidance Agreement may override domestic treatment and prescribe the applicable withholding tax rate, and potential domestic service tax consequences should also be considered.