Section 196 and 206AA TDS Deduction on Foreign Payments
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.
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