Good move for Non-Residents not having PAN
Section 206AA of Income Tax Act, 1961 stipulates that any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB ) shall furnish his Permanent Account Number to the person responsible for deducting such tax failing which tax shall be deducted at the higher of the following rates, namely:—
(i) at the rate specified in the relevant provision of this Act; or
(ii) at the rate or rates in force; or
(iii) at the rate of twenty per cent.
Due to above provision, most of the Non-residents / foreign companies having one of transactions with Indian entities in the nature of royalty, fees for technical services used to face compulsory deduction of TDS @20% in absence of PAN taken in India.
There is a good news for such non-residents!!!
CBDT has issued notification no. 53/2016 dated 24 June 2016
giving relaxation to Non-residents from furnishing PAN no. in India. TDS at
higher rate of 20% will not be deducted if following conditions are satisfied
by non-resident:-
Provisions of Sec 206AA shall not apply in respect of
payments in the nature of
- Interest,
- Royalty,
- Fees for technical services and
- Payments on transfer of any capital asset,
if the non-resident furnishes the following details/
documents:
(i) name, e-mail id, contact number;
(ii) address in the country of which the non-resident
is a resident;
(iii) Tax Residency Certificate (TRC) from the Government of
that country if the law of that country
provides for issuance of such
certificate;
(iv) Tax Identification Number (TIN) or any other Unique
Identification Number of the non-resident
of his residence country.
All the above information needs to be furnished
in TDS returns as well.
