Singapore Company: FTS Taxed at Treaty Rate, Not Domestic Rate
Situation
A Singapore-based company was providing fees for technical services (FTS) worth about ₹50 lakh to an Indian client. The Indian payer defaulted to the higher domestic withholding rate of over 20% (about ₹10 lakh), unaware the India-Singapore DTAA capped FTS taxation at a lower rate.
Approach
We reviewed the services against the treaty's FTS article, confirmed the lower rate applied, helped the company obtain its TRC and file Form 41, and worked with the Indian payer to correct the TDS rate on remaining and future payments.
Outcome
The applicable TDS rate dropped from over 20% to the treaty rate of 10%, on the ₹50 lakh payment, that meant ₹5 lakh withheld instead of ₹10 lakh. The company avoided a refund filing altogether and now maintains treaty documentation proactively for future India income.
Identities are anonymized to protect client confidentiality. The situation, approach, and figures reflect an actual engagement.
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