We are a company based in Mumbai and require to hire a consultant in Singapore for some business research activity for initiating & looking for opportunities in the Asia Pacific region. It's a one time activity and and the amount is Rs 30 lacs to be paid to an individual ( NRI staying in Singapore on a PR card since 2008) and works as a free lancer. We have the option to remit the amount to his personal account in Singapore or pay his company registered in Singapore. Do we need to account for TDS TCS or any other tax in this transaction ? Kindly advice.
In context with the above question if TDS is required to be deducted & we remit it to his account as he has a PAN card in India as he is an NRI and has some other income in India also. Having done so can he claim these taxes using Double tax treaty ? Pls advice.
Yes you hve to deduct TDS while making the remittance abraod.
The rate of TDS will depend upon the DTAA provisions between India and Signapore.
Form 15CA & 15CB has to be filed.
As mentioned above that the NRI is having PAN in India. If he is filing return in India then he can take the tax benefit of the TDS deducted.
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1. Such services would fall under the definition of fees for technical services.
2. Remitter company is liable to deduct TDS u/s 195 @ 10.4% on Rs. 30 lacs. Remitter company has to file Form 15CB,15CA, A2 and copy of invoice to the bank for such remittance.
3. The rate of tax is 10% under the tax treaty. Article 12 of DTAA is applicable. To avail the benefit of rate of 10%, remittee has to furnish the TRC (Tax residency certifcate of singapore) to the remitter company in India.
4. He (Remittee) can claim the benefit of DTAA in a country of residence.
5. Remiter company is also liable to pay GST on import of services.
For detailed discussion, you may opt for phone consultation. I can assist you in filing Form 15CA and 15CB.
First we need to check the nature of transaction whether the transaction will be considered as fees for for technical service or professional services or business income.
Next considering you are saying it'll be a kind of consultancy it could fall under FTS and accordingly as per income tax act TDS needs to be withheld but we need to check other documents and whether benefit of DTAA can be taken or not.
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I recommend to enter into an agreement for the local research service, by doing that transaction will not classify as fees for technical service and it will shift to Permanent establishment based taxation
You can take Tax residency certificate from the party and there is no need to Tax deduction on the transaction and can directly remit the fund
However this transaction will have GST implication under import of Service
1. It needs to be ascertained whether these are professional, technical services or business income.
2. Remitter company is liable to deduct TDS u/s 195 @ 10.4% on Rs. 30 lacs. Remitter company has to file Form 15CB,15CA, A2 and copy of invoice to the bank for such remittance.
3. The rate of tax is 10% under the tax treaty.
4. If make available test is not satisfied then no TDS.
4. He can claim the credit of taxes in Singapore
