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I-T dept may lower withholding tax for foreign firms having income in India

They are required to withhold taxes on payment to another party and deposit that tax with the govt

Press Trust of India  |  New Delhi 

income tax, I-T
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The department is open to lowering the rate for foreign which have in India, a senior official said on Wednesday.

(CBDT) Chairman Sushil Chandra also urged firms and MNCs operating in to pay their due share of taxes and said adequate safeguards have been put in place to ensure that anti-abuse provisions like GAAR are not misused.

He also asked industry experts to come forward with suggestions on

"I would like to be informed in which areas the TDS (tax deducted at source) is high so that we can think of reducing that also. We are absolutely open to any suggestions which can make the life of a genuine taxpayer easy," he said speaking at an International Tax Conference organised by here.

Foreign entities having in India, as well as domestic companies, are required to withhold taxes on any payment to another party and deposit that tax with the usually have to withhold taxes interest, royalties or fees paid for technical services.

Chairman National Council on Direct Taxes Rahul Garg said the tax department issues refunds to the tune of Rs 40,000-60,000 crore every year and hence the industry chamber has suggested a relook of the scenario.

"Withholding tax deducted by various segments of business vary somewhere between 1-42 per cent. Since the refund quantum is so large, we have suggested the department to analyse the class on investors to whom refund is due every year and reduce the TDS rate for them," Garg said.

Chandra said the General Anti Avoidance Rules (GAAR) will be used in exceptional circumstances and only to ensure that the country gets its due share of taxes.

GAAR will be invoked only if the tax provisions are misused, he said, adding that companies, firms or MNCs should believe in fair taxation.

Chandra said the policies of department have been very transparent and are being decided after considering the concerns of stakeholders.

Under GAAR, which has come into effect from April 2017, the taxmen may potentially want to know whether the transaction was done in the normal course of business or conducted simply with the intention to avoid taxes.

First Published: Wed, August 23 2017. 14:08 IST