CHECK LIST

CAS CERTIFICATE FOR TDS FROM PAYMENTS TO NON RESIDENTS

1) Name & Address of the Recipient & Beneficiary: Provide details of the recipient and actual
beneficiary- the remittance may be made to a third person.

2) Obtain Tax Residency Certificate issued by Tax Authorities of the country where the payee is
located. If payee is a Branch, Tax Residency Certificate in respect of the Parent company e.g. an
Entity based in Hongkong could be a Branch of a company incorporated in U.S.A. or U. K. or
Japan etc.? [This information is important to determine which Tax Treaty would be applicable]. It
is important that the TRC should specifically mention that the recipient is a tax resident of the
home country under the particular Tax Treaty entered into with India.

If tax residency Certificate is not immediately available, obtain a Self Declaration from the Payee
(Sufficiently detailed) to the effect that the Payee is a Tax Resident of a particular Taxing
Jurisdiction. Make disclosure of your reliance on Payees Self Declaration in the Certificate.

3) Status of the Recipient: Whether Individual, Partnership Firm, Incorporated Company, Trust,
Association of Persons (Society etc), Bank or Government or a Government Body or any other
status [Taxability and Rate of tax depends upon the Status of the payee]

4) Nature of Remittance as per agreement/document: Whether Royalty, Fees for Technical
Services, Professional Fees, Business Income, Interest, Dividend, Management Fees,
Reimbursement of Expenses or Other Income etc.

5) Ascertain applicable rate of TDS under applicable DTAA as well as under Domestic law.

6) In case the remittance is for Net of Net of taxes agreements: Whether tax payable has been
grossed up? Provide computation.

7) Ascertain the correct classification of income: To do so, following details & documents are
required-
a) Contract with the payee and other supporting documents, correspondence/emails, broachers
etc.
b) Invoices and supporting vouchers.
c) In case of Reimbursement of Expenses, supporting invoices /voucher and other documentary
proof
d) Any other document which may help in determining the nature of payment/ quantum of
income.

[Classification of Income is very important as the ultimate taxability and applicable rate of tax
depends upon the nature of income.]

8) In case the remittances is towards Royalty, FTS, Interest, Dividend, etc.:
Please Indicate-
a) Clause of DTAA under which remittance is covered with reasons

b) Rate of TDS under DTAA

c) If rate applied is lower than rate prescribed under DTAA, reasons thereof

If the payment is in the nature of Fees for Technical Services, obtain a Self Declaration of the
Payee to the effect that its presence/activities in India would not constitute a PE in India in terms
of Article 5 of the applicable Tax Treaty.

9) In case the remittances is for supply of articles or things (e.g. plant, machinery, equipment,
etc.):
Please indicate
a) Whether recipient has any PE in India?

b) Whether, directly or indirectly, such activities of supply of articles or things done through the
PE?

c) Whether the sale of such articles or things has happened in India?

If the payee has a PE in India, obtain Payees Self Declaration to the effect that the transaction in
respect of which the payment is being made, is not directly or indirectly connected with the
activities of its PE in India.

d) If yes, the amount of income comprised in such remittance which is liable to tax in India?
Please provide basis/ computation of taxable amount.

e) If no, give reasons

Obtain a Self Declaration from the Payee to the effect that it does not have a Permanent
Establishment (PE) in India in terms of Article 5 of the applicable Tax Treaty.

10) In case the remittance is on account of business income :

Please indicate-
a. Whether such income is liable to tax in India?
b. If yes, the basis of arriving at the rate of TDS
c. If no, reasons thereof.

11) Date of Deduction of TDS, amount of TDS deducted, Exchange Rate on the date of deduction of
TDS to ascertain the correctness of amount of TDS.

12) Photocopy of the receipted TDS Challan.

13) Particulars of the Bank (Name, Branch, Address, Account No.) thru which the remittance is to be
made.

Note: Please note the above is a general Check List which would be applicable to most
remittances of common nature. However, additional documentation may be required in
special cases.

PERFORMA 1
(on letter head of the Payee)

DD/MM/YYYY
The Principal Officer
XYZ Ltd.
Adress
India

Dear Sirs,

We refer to the consideration payable to us under the ____________________ Agreement
(the Agreement) dated ____________ in respect of (nature of consideration i.e.
Royalty/FTS/Prof. Fee/Business Income/Interest/Dividend/Management Fee/Artistes
Fee/Other Income/Reimbursement of Expenses).

In connection with the above, we do hereby confirm as under:

1. I/We am/are an/a Individual/Partnership Firm/Company Incorporated /Trust/AOP/Bank/
Government Body formed/incorporated in (Name of the Country) and a Tax Resident of
(Name of the Country) under the Domestic Tax laws of the Country.

2. We qualify as Tax resident of (Name of the Country) in terms of the India- (Name of the
Country) Double Tax Avoidance Agreement (Tax Treaty) and do not qualify as a
resident of India under section 6 of the Indian Income Tax Act, 1961. We are therefore
eligible to invoke the beneficial provisions of the Tax Treaty in respect of any income
derived from India.

3. We do not have any office or other fixed place of business in India as envisaged in Article
5(1) and Article 5(2) of Tax Treaty.

4. We do not have any dependent agent performing activities in India as envisaged in Article
5(5) of the tax treaty which may constitute a dependent agency Permanent Establishment
for us in India in terms of thereof.

5. Our presence/activities in India in connection with the provision of Technical Services for
which payment of FTS is being made, would not constitute a Service PE in India in terms
of Article 5 of Tax treaty. (strike out if not applicable)

OR

We have a PE in India but the transaction, in respect of which the payment is being made,
is not directly or indirectly connected with the activities of its PE in India. (strike out if
not applicable)


6. We are the beneficial owner of the consideration receivable under the Agreement.
Contd.
::2::

7. In view of the above, we certify that we qualify as a tax resident of (Name of the Country)
and do / do not (strike out whichever is not applicable) have a Permanent
Establishment in India under the provisions of Tax Treaty.

In the event of any change in the above position, we will intimate the same to you in writing.
You may consider the above representations as subsisting unless intimated otherwise.

We trust that the above meets with your requirements.


Yours faithfully,

For ________ Ltd.



Authorised Signatory

Name:

Designation:

PERFORMA 2

(On the letterhead of ______________)


No Permanent Establishment Certificate / Statement


I ________________________(Name), _____________(Designation) of M/s.
__________________________________having its national office at
___________________________________________________________________________________
_______________________________________________________

Hereby state that:

a. ___________________is a valid and subsisting _______company incorporated and
resident in Australia;

b. __________________ is the legal and beneficial owner of the payment towards
____________________.

c. ___________does not wholly or partly carry on business in the republic of India through a
permanent establishment situated therein, as defined in the India Australia tax convention
( Article 5 Permanent Establishment);

d. _____ does not have a Business Connection in the republic of India, as defied in
Explanation 2 to Section 9(1)(i) of the Income Tax Act, 1961.

(Refer Annexure for text of Treaty provisions and Income Tax Act provisions)


Dated and signed in Australia on ______________________

For ______________________


____________________(Name)
____________________(Designation)
Annexure to Certificate

(i) Text of Article 5 on Permanent Establishment as per India- Australia Double Taxation
Avoidance Treaty
1. For the purposes of this Agreement, the term permanent establishment means a fixed place of business through which the
business of an enterprise is wholly or partly carried on.
2. The term permanent establishment shall include especially :
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;
(g) a warehouse in relation to a person providing storage facilities for others;
(h) a farm, plantation or other place where agricultural, pastoral, forestry or plantation activities are carried on;
(i) premises used as a sales outlet or for receiving or soliciting orders;
(j) an installation or structure, or plant or equipment, used for the exploration for or exploitation of natural resources;
(k) a building site or construction, installation or assembly project, or supervisory activities in connection with such a
site or project, where that site or project exists or those activities are carried on (whether separately or together with
other sites, projects or activities) for more than 6 months.
3. An enterprise shall be deemed to have a permanent establishment in one of the Contracting States and to carry on business
through that permanent establishment if :
(a) substantial equipment is being used in that State by, for or under contract with the enterprise;
(b) it carries on activities in that State in connection with the exploration for or exploitation of natural resources in that State;
or
(c) it furnishes services, including managerial services and those mentioned in sub-paragraph (3)(h) to (k) of Article 12 but
not those services in respect of which payments or credits that are royalties as defined in Article 12 are made, within one
of the Contracting States through employees or other personnel, but only if those services are furnished within that State :
(i) for a period or periods aggregating to more than 90 days within any 12-month period;
or
(ii) for another enterprise, if both enterprises are within either of the relationships described in sub-paragraphs (1)(a) and (b)
of Article 9.
4. An enterprise shall not be deemed to have a permanent establishment merely by reason of :
(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise ;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or
display ;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting
information, for the enterprise; or
(e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for
scientific research, or for similar activities which have a preparatory or auxiliary character, for the enterprise.
However, the preceding provisions of this paragraph shall not apply where an enterprise of one of the Contracting States
maintains in the other Contracting State a fixed place of business for any purpose other than those specified in this paragraph.
5. A person acting in one of the Contracting States on behalf of an enterprise of the other Contracting State - other than an
agent of an independent status to whom paragraph (6) applies - shall be deemed to be a permanent establishment of that
enterprise in the first-mentioned State if :
(a) the person has, and habitually exercises in that State, an authority to conclude contracts on behalf of the enterprise, unless
the persons activities are limited to the purchase of goods or merchandise for the enterprise;
(b) the person has no such authority, but habitually maintains in that State a stock of goods or merchandise from which the
person regularly delivers goods or merchandise on behalf of the enterprise;
(c) the person habitually secures orders in that State, wholly or principally for the enterprise itself or for the enterprise and
other enterprises controlling, or controlled by or subject to the same common control as, that enterprise; or
(d) in so acting, the person manufactures or processes in that State for the enterprise goods or merchandise belonging to the
enterprise.
6. An enterprise of one of the Contracting States shall not be deemed to have a permanent establishment in the other
Contracting State merely because it carries on business in that other State through a broker, a general commission agent or any
other agent of an independent status, where that person is acting in the ordinary course of the persons business as such a broker
or agent. However, when the activities of such a broker or agent are carried on wholly or principally on behalf of that
enterprise itself or on behalf of that enterprise and other enterprises controlling, or controlled by or subject to the same
common control as, that enterprise, the person will not be considered a broker or agent of an independent status within the
meaning of this paragraph.
7. The fact that a company which is a resident of one of the Contracting States controls or is controlled by a company which is
a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself make either company a permanent establishment of the other.
8. The principles set forth in the preceding paragraphs of this Article shall be applied in determining for the purposes of
paragraph (5) of Article 11 and paragraph (5) of Article 12 of this Agreement whether there is a permanent establishment
outside both Contracting States, and whether an enterprise, not being an enterprise of one of the Contracting States, has a
permanent establishment in one of the Contracting States.









(ii) Text of Section 9(1)(i) of Income Tax Act, 1961 related to Income deemed to
accrue or arise in India

9. (1) The following incomes shall be deemed to accrue or arise in India :
(i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India,
or through or from any property in India, or through or from any asset or source of income in India, [* * *] or
through the transfer of a capital asset situate in India.
[Explanation 1].For the purposes of this clause
(a) in the case of a business of which all the operations are not carried out in India, the income of the business
deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably
attributable to the operations carried out in India ;
(b) in the case of a non-resident, no income shall be deemed to accrue or arise in India to him through or from
operations which are confined to the purchase of goods in India for the purpose of export ;
[* * *]
[(c) in the case of a non-resident, being a person engaged in the business of running a news agency or of
publishing newspapers, magazines or journals, no income shall be deemed to accrue or arise in India to him
through or from activities which are confined to the collection of news and views in India for transmission
out of India ;]
[(d) in the case of a non-resident, being
(1) an individual who is not a citizen of India ; or
(2) a firm which does not have any partner who is a citizen of India or who is resident in India ; or
(3) a company which does not have any shareholder who is a citizen of India or who is resident in India,
no income shall be deemed to accrue or arise in India to such individual, firm or company through or from
operations which are confined to the shooting of any cinematograph film in India.]


[Explanation 2.For the removal of doubts, it is hereby declared that business connection shall include any
business activity carried out through a person who, acting on behalf of the non-resident,
(a) has and habitually exercises in India, an authority to conclude contracts on behalf of the non-resident,
unless his activities are limited to the purchase of goods or merchandise for the non-resident; or
(b) has no such authority, but habitually maintains in India a stock of goods or merchandise from which he
regularly delivers goods or merchandise on behalf of the non-resident; or
(c) habitually secures orders in India, mainly or wholly for the non-resident or for that non-resident and
other non-residents controlling, controlled by, or subject to the same common control, as that non-
resident:

Provided that such business connection shall not include any business activity carried out through a broker,
general commission agent or any other agent having an independent status, if such broker, general
commission agent or any other agent having an independent status is acting in the ordinary course of his
business :

Provided further that where such broker, general commission agent or any other agent works mainly or wholly
on behalf of a non-resident (hereafter in this proviso referred to as the principal non-resident) or on behalf of
such non-resident and other non-residents which are controlled by the principal non-resident or have a
controlling interest in the principal non-resident or are subject to the same common control as the principal
non-resident, he shall not be deemed to be a broker, general commission agent or an agent of an independent
status.

Explanation 3.Where a business is carried on in India through a person referred to in clause (a) or clause (b)
or clause (c) of Explanation 2, only so much of income as is attributable to the operations carried out in India
shall be deemed to accrue or arise in India;]