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Topics - Ramasamy


Could any one please clarify  whether amendment proposed in Sec 115A to increase the TDS rate of royalty and FTS payment to NR will have any impact in TDS deduction u/s 206AA where non resident does not have PAN card and DTAA rate also less or equal to 20%?

Example : Suppose if one indian company want to make a royalty or FTS payment to non resident ( USA ) company who does not have PE and PAN card in India however non resident furnished valid TRC for the year 2013 to indian company. As per Sec 206AA, higher of the following three rate will be deducted.

i) rate specified in the relevant provision of the act or

ii ) rate or rates in force ( Sec 2 (37)(iii) ) - Rate as per sec 115A or DTAA rate whichever lower - 15%

iii) 20%

My doubt is what is the relevant provision of the act for the purpose clause i of Sec 206AA.

Is it  Sec 195 or 115A ? Though sec 195 does not specify any rate,  it give direction to deduct TDS as per rates in force.

Till last financial year , the amount of advance tax payable is computed after reducing the amount of  TDS that would be deductible on the estimated annual income. However, in a case where TDS is not deducted, tax is directly payable by the income receiver. In the past various court held that interest on delay in payment of advance tax is not chargeable in cases where tax is not deducted at source from income nor advance tax is paid.

The finance Act 2012,  amended the above position such that only tax already deducted at source will be allowed as a credit against tax payable while computing advance tax. Therefore, while estimating annual advance tax, tax deductible at source on estimated income cannot be claimed as credit for the computation of advance tax unless already paid.

While the amendment was aimed to correct the position as far as interest payable on advance tax was concerned, the wording is not good. A technical interpretation of this amendment would mean that even a salaried employee who earlier was not required to pay advance tax (as full amount of tax would be deducted from his salary) would be required to pay advance tax in respect of salary income pertaining to current FY but not  received on or before 31st March 13.

The impact is that interest will become payable in case advance tax is not paid in respect of salary income to be received. We would have to see whether any clarifications will be issued by CBDT in this behalf.
Discussion / TDS on service charges paid to STPI
January 26, 2013, 01:55:32 PM
Whether TDS needs to be deducted on the service charges paid to STPI ?
Dear All

An amendment to section 9 has been made through Finance Act, 2012 raising certain doubts about TDS on use of Telephone Bills, Mobile Bills and Broadband (Internet Charges) under section 194J. There is no clarification from the Board (CBDT) in this regard.

Need your views on the same
Discussion / Grossing up u/s 195A
January 26, 2013, 01:09:48 PM
Is Grossing up u/s 195A needs to be done at rate in force not at the rate at which the tax is to be withheld by the taxpayer?