Foreign Consulting Firm: Nil TDS on Service Fees
Situation
A foreign consulting firm was earning roughly ₹60 lakh a year in advisory fees from Indian clients. Absent a certificate, payers would have deducted TDS at a cautious ~20% before remitting, about ₹12 lakh a year, even though the firm’s activities created no taxable presence in India and the income qualified as treaty-exempt business income.
Approach
We assessed the firm's operations against the India-US treaty's business income and permanent establishment provisions, confirmed no PE existed, and prepared a Lower Deduction Certificate application supported by the treaty position, TRC, and Form 41 (formerly Form 10F), coordinating directly with the payers.
Outcome
The Assessing Officer issued a nil deduction certificate, taking TDS from the assumed ~20% down to nil, letting the firm receive its full ~₹60 lakh in annual fees with nothing withheld, avoiding an unnecessary refund cycle every year.
Identities are anonymized to protect client confidentiality. The situation, approach, and figures reflect an actual engagement.
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