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INTEREST
ON
ROYALTY, FEES FOR TECHNICAL SERVICES PAYABLE TO A NON RESIDENT
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Interest on, Royalty, Fees for Technical services payable to a Non
Resident [Sec. 40(a)]
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Condition
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Description
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I
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The
amount paid is interest, other than interest on loan issued for public
subscription before April 1st’ 1938, royalty, fees for
technical services or other sum.
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II
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The
aforesaid sum is chargeable to tax under the Act in the hands of the
recipient.
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III
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The
aforesaid sum is paid in the following situations:
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IV
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No
Tax Deduction at Source (TDS) at applicable rates has been made on the
aforesaid expenditure before payment to the recipient.
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Conclusion:
In
the event of the above conditions been satisfied the resultant expenditure
becomes non deductible from the business income of the assessee.
If
such Tax deducted at source is deducted and paid afterwards to the credit of
Central Govt. then deduction can be claimed in the year of such payment.
Following
are the Sections which cover broad TDS compliances:
Sec
193 or 194A: TDS on Interest.
Sec 194H: Commission or Brokerage.
Sec 194J: Fees for Technical/ Professional Services.
Sec 194C: Payment to Contractors/ Sub Contractors.
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