TDS u/s 195

[ASHISH DESAI]

we have credited in Dec'09, commission to a non-resident company ( tax resident In Hongkong) for effecting domestic sales in India.they also do not have any PE in India.except this,every time commission was paid on export sales only. this was the only commission on domestic sales. TDS was deducted & paid @ 10%, in absence of DTAA between India & Hongkong, we interpreted that 'rates in force' as prescribed in S. 195 is to be taken as defined u/s 2 (37A)(iii) to mean either of three rates, as per S 90A, beneficial rates to the assessee should be considered.

no TDS on payment on commission on export sales was deducted/paid. however, this being commission on domestic sales, TDS was deducted @ 10%.

kindly clarify & advise our stand.

is TDS  applicable @ 40% on the payment of commission, in absence of their having PE in India?

AI Summary

TDS on commission to non-resident companies may attract higher withholding rates when no PE exists; verify applicable rate in force.
Commission paid to a non-resident company without a permanent establishment for domestic sales triggers withholding under the domestic TDS regime; the applicable "rate in force" for a foreign company is the higher company withholding rate, distinct from the rate for non-corporate non-residents, unless a treaty provision prescribes otherwise.