Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether Tax Is Required To Be Deducted On The Amount Which Is Not Chargeable To Tax?

QUERY: Whether the decision of GC India Technology Centre P. Ltd. vs CIT [327 ITR 456 (SC)] can be taken advantage under section 40(a)(ia) to say that tax was not chargeable and hence tax need not be deducted on the payment?
ANSWER: Yes, the Supreme Court has confirmed that the obligation to deduct tax at source arises only if “sum is chargeable under the provisions of the Act” but it is not clear from the query how any interest, commission, brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident, or amount payable to a contractor or sub-contractor being resident for carrying out any work, is not chargeable under the Act? Therefore, liability to deduct tax under section 40(a)(ia) would remain, if the amount is credited or paid, whichever is earlier.

Posted in Income-tax

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