|
|
![]() |
|
|
Withhold 10 per cent tax on Software Maintenance Contract AIT News Network NEW DELHI.Authority for Advance Rulings(Income Tax) vide a ruling dated 28th February 2008 AIT-2008-81-AAR has ruled the rate at which the tax has to be withheld in relation to the payments made to non-resident company on the Software Maintenance Contract should be ten per cent, TDS apart from the applicable surcharge. The advance ruling was sought primarily on the issue whether the applicant is under an obligation to deduct tax at source under sec. 195 of the Income-tax Act in connection with two contracts (i) Hardware Repair Support Contract; and (ii) Software Maintenance Support Contract, which the applicant entered into on 26th April, 2006 (in continuation of previous Contracts of 2003) with Raytheon Company, USA, which is a non-resident foreign company. The questions the applicant were: In application No. AAR/753/2007: (i) Whether payment received by M/s. Raytheon Company under the transaction mentioned in Annexure I is liable to tax in (ii) Whether any tax is required to be deducted at source by the applicant on payments to be made to M/s. Raytheon Company? It was held that the applicant is not legally required to deduct tax on the payments made to Raytheon Company, In application No. AAR/754/2007: (i) Whether, under the facts and circumstances of the case, deputation of an engineer by M/s. Raytheon Company to (ii) Whether payment received by M/s. Raytheon Company under the transaction mentioned in Annexure I is liable to tax in (iii) Whether any tax is required to be deducted at source by the applicant on payments to be made to M/s. Raytheon Company? If yes, then what is the rate of withholding tax applicable? Authority also held that there is no bar, either express or implied against a resident applicant falling within the scope of sub-clause (iii) the jurisdiction of this Authority for a determination under sub-clause (ii) of clause (a) of the same section. The fact that such resident is a PSU notified under sub-clause (iii) of clause (b) should not make any difference. In addition to clause (iii), a PSU, being a resident, can very well fall within the sweep of clause (b)(ii) of Section 245N if it has undertaken a transaction with a non-resident and it can seek a ruling in respect of tax liability of non-resident as per clause (a)(ii) of Section 245N. (Click here for full text of Ruling AIT-2008-81-AAR) Related Story: · NRO deposit is “foreign exchange asset” subject to TDS @20 per cent · 10 per cent tax on capital gains to Holdings Co on sale of shares · Authority rules on data recovered and re-imported in different media · Imports for Power Projects exempt from Additional duty: Advance Ruling · Salary paid by Infosys to non-resident employee taxable: AAR · 10 per cent tax on sale of original and bonus shares by Foreign Resident · Profit from Portfolio Investment not business income · Authority Settles Tax on Capital gains by Real Estate Developers · Profits of dealings with HO by MNCs branch taxable · Payment to Parent MNC for cost of seconded personnel subject to withholding tax · Payments at Singapore to access portal hosted from Singapore taxable in India · Withhold taxes whilst paying to Microsoft for software: Advance Ruling · Company’s Name cannot be substituted under Rule 20:Advance Ruling · Holding Shares as investment not stock-in-trade · No capital gains in assessee’s hand on sale of shares by lender: ITAT · Loss on sale of shares held as investment is “capital loss”: ITAT · Transfer of exchange card exigible to capital gains tax · Redemption of stock appreciation rights Amount is income: Special Bench · Admission fee & infra dev paid to exchange is Revenue Expenditure |
|
| Copyright ©
2006 allindiantaxes.com | All rights reserved website designing India & CMS development: Softlogics & Developments |