Our view:
» As India has entered DTAA with the US, the rate of TDS will be 10% (excluding surcharge and health & education cess as per Income Tax Act) or 15% (as per DTAA rate) whichever is beneficial to remittee. Therefore, TDS will be deducted at 10% (excluding surcharge and health & education cess as per Income Tax Act).
» In case, if no PAN is furnished or details of X Ltd is not furnished as per Rule 37BC of Income Tax Rules, then TDS will be deducted at 20% (excluding surcharge and health & education cess as per Income Tax Act) or 15% (as per DTAA rate), whichever is higher. In this case, the TDS rate will be 20%.
» As remittance is chargeable to tax and the total amount of remittance is more than 5 lakhs, T Ltd will have to obtain a certificate in Form 15CB from a Chartered Accountant and then the information will be furnished in Form 15CA- Part C.
» Printout of the form electronically signed under digital signature needs to be submitted to the banker prior to remitting the payment.
» T Ltd can cancel the form within 7 days of filing Form 15CA.