Q. > Please Help: payment made to Non resident commission agents

301 views • Question added Dec 24, 2014 • Income Tax • By rakesh , CA , Delhi

We are manufacturer and exporter of Agro chemicals. We make commission payment to a marketing Agent overseas (anywhere world) and some of them required paying commission to third country/other global markets.
1. They are not our employee and don’t have a PAN card issued by Indian Income Tax Authorities.
2. They will be paid commission as a percentage of Export sales after due realization from the customers/buyers.
3. The agent neither has any PE in India nor any Business connection. Agent provides all the services outside India and received payment outside of India.

As per decided in various cases and tax law that where a non-resident agent of an Indian company operates outside country and payment is remitted directly abroad, hence, merely because an entry in books of Indian Company is made, it does not mean that the non-resident has received any payment in India

Our queries are:-
1. What status about of TDS? Weather TDS required or not. If yes than what rate?
2. What are mandatory documents required from the agents for making such payment of commission without TDS ?
3. Whether TRC is mandatory for making any payment to Nonresident.
4. If TRC not available with Non-resident agent than how to determine tax residency of agent? What valid documentary evidence can be obtained?
5. If TDS deducted in India then what is the procedure of claim of refund?
6. If Nonresident agent of country A provide their TRC to us and required in their bill to make the commission payment to him at their bank account which has opened in country B. Can we do this?
7. if same condition for Nonresident purchase commission agent than what procedure should be followed?