PAN for overseas consultant

[seetha lakshmi]

Is there a statutory obligation for a overseas company to obtain PAN if they are going to send in their consultant to offer services in India for a period of 5 months? What are the implications of not obtaining a PAN? The company is a Singapore company which has a double tax treaty with India.

[Rama Krishana]

In case the non resident receiving any income on which TDS (withholding tax) is required to be deducted, such non resident is required to have PAN. Otherwise, tds rates would be 20%

[Anuj Gupta]

If the foreign company which is located in Singapore sends their employees to India for a period of more than 90 days in fiscal year then the foreign Company shall be forming a service PE in India and then the income so paid to the foreign company shall be chargeable u/s 44DA of I T Act,1961.The foreign party has no escape route in the India Singapore Treaty also and is also chargeable for the same under Article 5 & 7. So kindly be careful in making payment of such type and I may suggest the following steps: 1.Ask the Singapore Party to obtain PAN. 2. Then ask the Singapore party or Indian Party to obtain an order from ITO u/s 195 or 197 and then only make any payment based on that order.

AI Summary

PAN requirement for non-residents may trigger higher withholding unless PAN obtained and PE risks assessed. Non-resident recipients of payments requiring tax deduction at source must obtain PAN; absence of PAN leads to a higher withholding rate. If a foreign company's employees remain in India beyond ninety days in a fiscal year, their presence may create a service permanent establishment, making income chargeable under domestic provisions and the India-Singapore treaty. Advisers recommend that the foreign supplier obtain PAN and that payors seek an order under section 195/197 from the tax authorities before effecting payments to determine appropriate withholding.