TDS on fees for technical services increased, prompting DTAA reliance and requests to align filing exemptions for treaty relieved taxpayers.
The amendment raises domestic withholding on payments for fees for technical services to non-residents, increasing payor withholding obligations and encouraging recipients to invoke DTAA benefits. Concurrently, the statutory filing exemption for non-residents whose sole Indian income is subject to domestic withholding no longer applies where tax is withheld under DTAA, thereby creating mandatory return filing obligations for treaty relieved taxpayers despite no further tax liability. The author requests that the filing exemption be extended to cases where tax is deducted under DTAA to avoid duplicative compliance and deter unintended adverse effects on foreign service providers. (AI Summary)