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clarification required on proposed amendment in Sec 115A

Started by Ramasamy, March 22, 2013, 04:57:28 PM

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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.



You are right.  The proposed amendment to section 115A makes the provisions of section 206AA redundant so far as it relates to deductions under section 115A.  Now the proposed  rate is 25%.  Thus there would not be any difference for a PAN card holder and non -PAN holder.  Bothe will be subjected to TDS@25%.

Lets wait for the final passage of the bill.  There is a need to relook into these provisions.