Withholding Tax

[Pradeep Kaushik]

Respected Sirs,

We have to make a royalty payment to our Korean Company . On the Royalty payment there is liability to deduct TDS @ 20.6%.

Our Auditors suggested to get that PAN from the India Tax Authority to avail the beneficial tax rate.

Is it possible to obtain PAN for a Korean Company. If Yes, please let me know the procedure. After getting the PAN what section of TDS will be applicable on that Korean Company, how we issue the TDS Certificate and how that Korean Company will get the benefit of the TDS certificate.

Please clarify in details.

Best Regards.

Pradeep Kaushik

[Dhirendra Srivastava]

Dear Sir

 

Yes it is possible for the korean company tio have a PAN in India.

Following are the requirements:

a) Copy of registration certificate of the respective country duly attested by Indian Embassy/ Consulate/ High Commission/ Apostille in the country where applicant is located.

b)Copy of certificate of registration with the competent authority in India

c) Copy of approval issued by the competent authority in India

d) Copy of the accompanying documents alongwith the approval issued by competent authority in India

e) Copy of the application (duly acknowledged) made by the applicantbefore the competent authority in India

 

Thanks and Regards

 

[Dhirendra Srivastava]

Further After Getting the PAN, the TDS will be deducted u/s 195. TDS certificates Form 16A will be issued in the same way as it is issued for other parties after filing TDS return in Form 27Q.

As far as the benefit is concerned, we need to see the Indo Korean DTAA. If the Korean company takes the benefit in Korea, then no refund can be claimed in India.

AI Summary

Withholding tax on foreign royalty payments requires TDS u/s 195; PAN enables Form 16A issuance after Form 27Q filing.
A foreign (Korean) company may obtain an Indian PAN by submitting an embassy attested registration certificate and copies of Indian competent authority registration, approvals, accompanying documents and the acknowledged application. Once PAN is obtained, tax is to be withheld under domestic TDS provisions and Form 16A certificates issued after filing the TDS return in Form 27Q. Relief under the Indo Korean DTAA must be separately assessed and may preclude an Indian refund.