Is the Rate under is DTAA is comprehensive?

Question

Is the Rate specified in the DTAA is inclusive of Surcharge and education cess or Do we need to seperately deduct Surcharge and Education Cess

Sriram

Answer 1

You do not need to pay surcharges if under DTAA.

This position has been judicially held also in following cases

ITO vs. Degremont International (1985) 11 ITD 564 (Jp – Trib)

CIT vs. Davy Ashmore Ltd. (1991) 190 ITR 626 (Cal)

CIT vs. VR S.R.M. Firm (1994) 208 ITR 400 (Mad)

Banque National De Paris vs. IAC (1991) 94 CTR (Bom) 57

CIT vs. R.M. Muthiah (1993) 202 ITR 508 (Kar)

Education Cess or Surcharge are prescribed under I .T Act and not DTAA. Therefore , in case any payment has to suffer withholding tax and it is being paid to a person resident of another country with which there is Double Taxation Avoidance Agreement with India , tax rate applicable will be strictly according to the rate prescribed in DTAA which obviously does not prescribe for education cess or surcharge.

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Answer 2

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