Please read this article as a deductee to get more clarity.
While making foreign remittance we deduct TDS whether as per Income Tax Act,1961 or as per DTAA or provide the benefit of DTAA, whichever is more beneficial to assessee.
Case-1: If we are taking benefit of DTAA:
1. Section 90(4) of the Income Tax Act mandates the requirement of TRC (Tax Residency Certificate) if we want to claim any relief under DTAA otherwise no relief under DTAA will be provided.
2. Section 90(5) of the Income Tax Act mandates the requirement of 10F in addition to TRC.
Therefore to claim any benefit under DTAA, TRC & 10F are a must along with the No-PE declaration.
Case-2: If we are deducting TDS as per rate mentioned in Income Tax Act
Section 206AA of the Income Tax Act mandates a person who is entitled to receive any amount on which tax is deductible to furnish PAN to the deductor, failing which TDS will be deducted at higher of the following rates:
1. at the rate specified in the relevant provision of this Act; or
2. at the rate or rates in force; or
3. at the rate of 20%
However, a relaxation under Rule 37BC has been provided here in case of non-resident or foreign company if the nature of payment is Interest, Royalty, Fee for Technical Services or it is on the Transfer of any Capital Asset, but non-resident or foreign company has to furnish following details:
1. Name, Email ID & Contact Number
2. Address
3. TRC
4. Tax Identification Number in foreign country or Unique Number of that country
Accordingly, as you can see, even if we are applying the TDS rate as per the Income Tax Act, we would be needing TRC otherwise TDS would be deducted at 20% or higher rate followed by cess in non-PAN cases.
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Hi. I have query.
If my company does a MTT (Merchanting Trade Transaction) wherein we buy from X country and sell to Y country. Then, when paying for the goods to supplier in X country, do we need to withhold TDS if TRC is not provided by supplier?
Hi. Im a long term bona fide resident of india, us citizen. Have been paying indian income tax. Question: is filing form 2555 along with 1040 ez enough or do I need to obtain a dtta also? Please advice. Thanks. Gayathri
hey i want to apply for pan as a non resident foreigner.
what do i need to submit beside form 49AA?
If we are deducting tax as per Income Tax but not using Grossing up method, can we do away with requirement of Form 10F?
Hi,
Which TDs rate applicable if NR supplier submitted TRC & form 10f but no PE in India .
What is the frequency of collecting TRC.?
Do we need to obtain every year or it is for One time
Hi, we have PAN card of our foreign companies, do we still requires to collect TRC documents. Thanks in advance
We have made payment to Non-Resident after deducting TDS. The NR has given us TRC but does not have PAN.
How to file TDS return so that the NR can get tax credit.