Non resident directors' remmuneration under income tax

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  1. paresh zatakia

    paresh zatakia New Member

    TTI (Indian company) is 100% subsidiary of TTE (Italian company)

    Mr.M (Italian citizen staying in Italy) is a director in both the companies.

    He sits in Italy, takes all major decision sitting over there ( He Comes to India only for

    2-3 days in a year).He want TTI to pay small directorship salary/remuneration of €1000 p.m.


    1)Whether it will taxable in India or not , considering Income tax Act & DTAA

    2)If yes at what rate TDS should be deducted?

    kind regards

    c.a.paresh Zatakia


    [email protected]
  2. ZED

    ZED Well-Known Member

    Yes, it will be taxable in India. DTAA allows it to be taxed in India.

    TDS shall be u/s 195 @ 30%

    The amount of income-tax deducted in accordance with the provisions of–– (i)* item 1 of this Part, shall be increased by a surcharge, for purposes of the Union,––
    (a) in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Incometax Act, being a non-resident, calculated at the rate of fifteen per cent. of such tax; and

    (b) in the case of every co-operative society or firm, being a non-resident, calculated at the rate of twelve per cent., where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees;

    [*This case falls in item 1]

    “Education Cess” at the rate of two per cent. and “Secondary and Higher Education Cess” at the rate of one per cent. shall continue to be levied in all cases covered under Part III of the First Schedule. In the cases covered under Part II of the First Schedule, there will be no levy of the Education Cess and Secondary and Higher Education Cess on tax deducted or collected at source in the case of domestic company and any other person who is resident in India.
    Both the cesses would continue to apply on tax deducted at source in the case of salary payments. These would also continue to be levied in the cases of persons not resident in India and companies other than domestic company
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