Income Tax: Deduction of tax for payment towards FTS outside India

Here is a reckoner for deduction of tax or withholding of tax for payments made out side India.

The following needs to be taken note of before following the reckoner.

1) The present rate of taxes for foreign companies is 40% with addition of surcharge and cess the rate will go up to 43.26%

2) Whenever there is non availability of PAN 20% tax has to be deducted u/s 206AA

3) DTAA rate is different from one treaty to another most of the treaties give 10% rate for FTS, we have taken the same for computation purpose.

4) Section 115A has been recently amended and the tax rate is now brought down to 10% however we need to add surcharge and cess to the rate. This will work out to 10.815% which is rounded off to 10.82%

195

Kindly consult your Chartered Accountant before making any decisions. Please use the comment column to communicate anything with me.

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