Section 196 and 206AA TDS Deduction on Foreign Payments - Professionals - Taxation - TIK Share
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Section 196 and 206AA TDS Deduction on Foreign Payments


CA Pulkit Sharma

2014-09-27

To avail DTAA benefits, TRC is compulsory, PAN is not a requirement.

However, as per section 206AA, if deductee does not have PAN TDS should be higher of applicable rate or 20% whichever is higher.

Summary:

If Deductee have TRC but not PAN:

      Tds should be Rate applicable as per DTAA or section 206AA(20%), whichever is higher.

 

If deductee has TRC and PAN:

     TDS should be deducted as per rates in DTAA agreement

 

Does not have TRC or PAN:

    TDS should be deducted at the highest of:

-          Rate applicable as per IT act, 1961

-          Rate as per section 206AA

-          40%, if deductee is in NJA

-          Rate in Force

Whichever is higher