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Tax treaty rates to prevail for withholding tax, even if non-resident does not have PAN
© Provided by The Times of India
MUMBAI: The Income tax Appellate Tribunal (ITAT) – Ahmedabad bench, has held that for the purpose of withholding tax in India, the beneficial rates of the relevant tax treaty shall prevail over the rates prescribed under India’s Income-tax (I-T) Act, even when the non-resident does not have a permanent account number (PAN).
In other words, a PAN is not a precondition to adopt the beneficial rates in the tax treaty for the purpose of withholding tax.
In this case, Jyoti Limited, a listed company, engaged in the field of engineering, had deducted tax at source at 10% on payments made to a Czech Republic resident-entity, which had not provided a PAN number. This rate was prescribed under the India-Czech Republic tax treaty.

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