Beneficial DTAA withholding rates prevail over PAN-based higher deduction requirements for non-resident royalty and technical service payments.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Beneficial DTAA withholding rates apply to royalty and fees for technical services paid to non-residents where those rates are more favourable than domestic law. Section 90(2) gives treaty provisions priority in such circumstances. The higher tax-deduction requirement for non-furnishing of PAN under section 206AA is procedural and does not override the applicable beneficial treaty rate. Accordingly, tax deducted at the relevant DTAA rate does not create a short-deduction liability merely because the PAN-based domestic withholding rate is higher; the related demand and consequential interest were deleted.....