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Evaluation of Non Resident Assessee via Agents

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Evaluation of Non Resident Assessee via Agents



Person Considered as The Agent

Nonresident assesseees can be defined directly or via non-resident. Individuals that can be considered as the 'agent' of assess of a non resident are mentioned below:

  • Trustee or company personnel of the non-resident;
  • An individual having a business relationship with the non-resident;
  • An individual from or via whom the non-resident gets payment for rendering any service or product;
  • An individual who has got a property in India from the non-resident

Chances of being heard and any depiction from the person are taken care of prior to treating him as the 'agent' of the non-resident.

Double Taxation Avoidance Agreement (DTAA)

In case of nations that India has a Double Taxation Avoidance Agreement with, the rates of tax are calculated by DTAA and are mentioned for different nations as mentioned below:

Particulars Dividends (except what is referred under Section 1150) Interests Royalty Fee for technical service
Australia 15% 15% (Note 2) (Note 2)
China 10% 10%(Note 1) 10% 10%
Italy 15% if minimum 10 percent of the dividend payer is owned by the receiving company; in other instances it is 20% 15% (Note 1) 20% 20%
Canada 15% if minimum 10 percent of the dividend payer is owned by the receiving company; in other instances it is 25% 15% (Note 1) 10% to 20% 10% to 20%
Germany 10% 10% (Note 1) 10% 10%
France 10% 10% 10% 10%
Netherlands 10% 10% (Note 1) 10% to 20% 10% to 20%
Spain 15% 15% (Note 1) (Note 3) 10%
South Africa 10% 10% (Note 1) 10%
Japan 15% 10% if the recipient is a bank; otherwise it is 15% (Note 1) 20% 20%
Singapore 10% if minimum 25% shares of the dividend paying company is owned by the receiver; otherwise it is 15% 10% in case the loan is approved by a financial institution like a bank or insurance provider; otherwise it is 15% 15% for copyright; otherwise it is 10% 15% for copyright; otherwise it is 10%
Mauritius 5% if minimum 10% of the total capital of the dividend paying companies is owned by the receiver; for others it is 15% 20% (Note 1) 15% No special provision
UK 15% 10% in case the interests are payable to a bank; for others it is 15% (Note 1) (Note 3) (Note 3)
Turkey 15% 10% in case the receiver is a bank; for others it is 15% (Note 1) 15% 15%

Points to be Noted

  1. Interests or dividends earned by the government or organizations such as Reserve Bank of India (RBI) are excluded from any sort of taxation in the source country.
  2. Fee and royalty for rendering technical services may be taxable in the source nation at the below mentioned rates:
    • 10% for rental of equipments or services including know-how and other technical facilities;
    • In other cases
    • i. 15% in case the payer is the Government or specific institutions;

      ii. In other cases, it is 20%

    • Succeeding years, 15% for all instances
    • Earnings of the Government and other organizations are non-taxable within the source nation.

  3. Fees and royalty for technical jobs may be taxable within the source country at the below-mentioned rates:
  4. a) 10% for royalty related to payments for using any commercial, industrial or scientific equipments;

    b) 20% for fees for technical jobs and other types of royalty

Result of Failing to Tax Deduction or Paying Tax

While someone, who is needed to deduct any amount according to the Income Tax Act, but doesn't deduct the amount actually, or doesn't make payment or after deduction fails to make payments may considered as the 'assesse in default' and in such case, the assesse would be responsible for paying penalties and interests.


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