Payment to non dtaa country

[Manish Kumar]

Dear  Sirs

I am R.Manish , working as a accountant in a Forwarding company(Logistics). Being as a forwarer we remit money to foreign customers and get inward from them.

I have a doubt in payment made to a NON Dtaa Country.

i want to know what are issues if the payment is made to a NON Dtaa Country.

i want to make a payment for the customer in Latvia, which is non dtaa..

Amt is USD 3200 around...

await for ur reply.

Manish

[CA Rachit Agarwal]

In absense of DTAA, the tax will be levied as applicable to the Non- Resident.

Nature of payment is to be understood and implications of Section 195 alongwith the chargeability Section 9 of the Income Tax Act, 1961 to be gone though.

Untile the purpose of payment and nature of payment, it would be difficult to ascertain whether the remittance would be chargeable to income tax.

[Manish Kumar]

Dear Sir

Thanks for ur suggestion.

I need some more answer for few of my questions Below.

This time my payment country is Benin.

Amt is USD 740

Purpose of Payment : Freight Charges or Delivery Charges.

 

want to know any tds rate is applicable for this or

% of tds rate

% on which amount.

Advance thanks for ur reply.

AI Summary

Withholding tax on payments to non DTAA countries depends on payment nature and domestic withholding rules. Payments to countries without a tax treaty are governed by domestic law: determine whether withholding arises under Section 195 and whether the remittance is chargeable under domestic chargeability rules by first ascertaining the precise nature and purpose of the payment (e.g., freight or delivery charges); in absence of a DTAA treaty relief does not apply and the appropriate TDS treatment and rate must be fixed under domestic law on the taxable element.