TDS on foreign payment+ section 206AA

[Naveen Jain]

 Dear All,

Please confirm the tds rate in following situation

As per Budget amendment tds rate for foreign payment in respect of fee for technical service is 25%, DTAA rate for Polland is 22.5% and foreign party does not have PAN so applicability of Section 206AA.  In that situation what is the rate of TDS?????????

Regards

CA. Naveen Jain 

AI Summary

Tax Deduction at Source rules require a higher default withholding when the payee lacks PAN, overriding the treaty rate.
Where a foreign payment for fees for technical services is subject to withholding and the payee lacks a PAN, the statutory TDS PAN rule requires deduction at the higher statutory/default rate rather than a lower treaty rate; the forum concludes the higher statutory rate applies, and a separate question remains about applicability of surcharge and educational cesses under that default withholding.