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May 2012

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By Avinash Rajopadhye, Chartered Accountant
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Sir,

Apropos of the article, ‘Taxation of commission payments to non-residents’, co-authored by three C.A.s in the International Taxation Section of the BCAJ Journal of March 2012, I would like to share my views as under:

It is true that while dealing with International Taxation we must analyse the given issue with reference to tax law, circulars, notifications, DTAA, and case law evolved by jthe udiciary. The co-authors have done excellent exercise by bringing out the finer points. However, there are two more aspects which one should explore.

First, if an Indian resident agent receives commission from a foreign exporter, what are the tax withholding provisions in the country of the foreign exporter?

Second, if the Indian exporter fails to pay commission to the foreign non-resident agent as per the contract, whether legal remedy (available to the foreign non-resident agent) to recover such commission is available in the Indian Court or in the court of the country in which services were rendered by the foreign non-resident agent. This may have a bearing on the chargeability of the commission. I think the above-mentioned issues should have been addressed while dealing with the commission issue.

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