Dear All,
Pls clarify my doubt.
While making any payment for service obtained from a non-resident shipping company, sec 194c will not be attracted.
Sec 195 says, must deduct TDS while making payment to non-resident shipping company.
Accordingly when he is assessed under 172, he is paying 7.5% tax on income.
My doubt is when we make payment such a NR foreign shipping company, do we need to deduct TDS.
If the NR Shipping company having branch in India and servicing on behalf of them, do we need to deduct TDS if the country goes into DTAA with the other country.
ie., if the company has NOC as per DTAA, while making freight for exports to that NR shipping company, do we need to deduct TDS. Does it over rules the sec 195.
Also clarify if such branch gets PAN number or service tax number , why dont it can be assessed as Indian company and accordingly TDS can be deducted.
Regards
Sriguru
From India, New Delhi
Pls clarify my doubt.
While making any payment for service obtained from a non-resident shipping company, sec 194c will not be attracted.
Sec 195 says, must deduct TDS while making payment to non-resident shipping company.
Accordingly when he is assessed under 172, he is paying 7.5% tax on income.
My doubt is when we make payment such a NR foreign shipping company, do we need to deduct TDS.
If the NR Shipping company having branch in India and servicing on behalf of them, do we need to deduct TDS if the country goes into DTAA with the other country.
ie., if the company has NOC as per DTAA, while making freight for exports to that NR shipping company, do we need to deduct TDS. Does it over rules the sec 195.
Also clarify if such branch gets PAN number or service tax number , why dont it can be assessed as Indian company and accordingly TDS can be deducted.
Regards
Sriguru
From India, New Delhi
Dear Sriguru,
Sec 194C deals with tax deduction at source against any sum paid to a RESIDENT for carrying out any work in pursuance of a contract either at the time of credit of such sum or payment thereof, whichever is earlier. Furthermore Explanation iv c to Section 194C defines work to include "carriage of goods or passengers by any mode of transport other than by railways; Hence payments made to Non-Resident Shipping Companies for carriage of goods or passengers will not attract any liability to deduct Tax at source U/s 194C since the payment is not to any RESIDENT. However, these non-resident shipping Companies work through agents or representatives who are resident and hence generally Liable for TDS u/s 194C. Sec 195 deals with Tax deduction at source for any payments made to any Non-Resident .
However payment made to either Non-Resident Shipping companies directly or to their Resident agents or representatives does not come under the purview of either Sec 194C or Sec 195 by virtue of Sec 172 (1) which inter-alia states that "The provisions of this section shall, notwithstanding anything contained in the other provisions of this Act, apply for the purpose of the levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India" . Hence the levy and recovery of Tax from Non-Resident Shipping will only be governed u/s 172 and not 194C or 194I. Kindly also see Circular No. 723 dtd 19-09-1995 of CBDT (attached) which further clarifies the same.
Since No TDS provision is applicable on Non-Resident Shipping Companies , Hence the question related to DTAA is not relevant.
From India, Delhi
Sec 194C deals with tax deduction at source against any sum paid to a RESIDENT for carrying out any work in pursuance of a contract either at the time of credit of such sum or payment thereof, whichever is earlier. Furthermore Explanation iv c to Section 194C defines work to include "carriage of goods or passengers by any mode of transport other than by railways; Hence payments made to Non-Resident Shipping Companies for carriage of goods or passengers will not attract any liability to deduct Tax at source U/s 194C since the payment is not to any RESIDENT. However, these non-resident shipping Companies work through agents or representatives who are resident and hence generally Liable for TDS u/s 194C. Sec 195 deals with Tax deduction at source for any payments made to any Non-Resident .
However payment made to either Non-Resident Shipping companies directly or to their Resident agents or representatives does not come under the purview of either Sec 194C or Sec 195 by virtue of Sec 172 (1) which inter-alia states that "The provisions of this section shall, notwithstanding anything contained in the other provisions of this Act, apply for the purpose of the levy and recovery of tax in the case of any ship, belonging to or chartered by a non-resident, which carries passengers, livestock, mail or goods shipped at a port in India" . Hence the levy and recovery of Tax from Non-Resident Shipping will only be governed u/s 172 and not 194C or 194I. Kindly also see Circular No. 723 dtd 19-09-1995 of CBDT (attached) which further clarifies the same.
Since No TDS provision is applicable on Non-Resident Shipping Companies , Hence the question related to DTAA is not relevant.
From India, Delhi
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
EPFO circular regarding TDS on Payment of Provident Fund.pdf
Amendment to Payment of Bonus Act 2015.jpg