Important news for Dutch companies with customers in India. The need to apply for a PAN (Permanent Account Number) registration has been removed.
Until the first half of 2016, Dutch companies sending invoices to Indian customers for (technical) services had to apply for a PAN registration in India. This was necessary to avoid the Indian customer being obliged to withhold 20% instead of 10% input tax on Dutch invoices.
As of July 2016, the Indian government has amended this legislation. Foreign (technical) service providers can now very easily qualify for the TDS (Tax Deducted at Source) low rate of 10% by providing the following information to the Indian customer:
- Name, e-mail address and telephone number
- Business address
- An English-language residence certificate. This can easily be requested from the Dutch tax authorities.
- RSIN number (fiscal number)
An additional advantage is that the 10% TDS can be claimed as a deduction item - for services provided to the Indian customer - in the annual VpB tax return. The condition is that the Indian client submits a TDS form at the end of the financial year, containing an overview of the input tax paid on behalf of the Dutch company.
More information or questions on this topic or other tax/legal matters in India? Please feel free to contact us!