TDS & GST on Honorarium Paid to Foreign Delegate in India

Taxability of Honorarium Paid to UK Non‑Resident for Lecture Delivered in India

• Applicability of TDS on Honorarium: The honorarium is being paid for services rendered in India (lecture delivered in New Delhi). Chargeability under the Income‑tax Act, 1961. As per Section 9(1)(vii) under the Income‑Tax Act, 1961., income by way of fees for technical services / professional services is deemed to accrue or arise in India when services are rendered in India.
• In this case the lecture was delivered in India; hence, the income accrues in India, and therefore, the honorarium is chargeable to tax in India.
• Accordingly, the income is deemed to accrue or arise in India as per Section 9 of the Income‑Tax Act, 1961, and is chargeable to tax in India. Therefore, Tax Deducted at Source is applicable u/s 195 of the Income‑tax Act, 1961. The honorarium for delivering a lecture would be classified as professional services / fees for technical services.
• We should note that Tax Deducted at Source u/s 195 under the Income Tax Act, 1961 may not be required if services are rendered entirely outside India, payment is not chargeable to tax in India, and a Double Taxation Avoidance Agreement grants exclusive taxation rights to the resident country.
• However, these clauses are not relevant in our case; non‑deduction should be backed by a Double Taxation Avoidance Agreement analysis and ideally a Section 195(2) application / Chartered Accountant certificate (Form 15CB) where relevant.
• Rate of Tax Deducted at Source: As per the Income‑Tax Act: 10% on the gross amount (plus applicable surcharge and cess), or As per the India–UK Double Taxation Avoidance Agreement, 10% on the gross amount, whichever is more beneficial, subject to fulfillment of Double Taxation Avoidance Agreement conditions.
• DTAA compliance: To apply the DTAA rate, the following documents are required: Tax Residency Certificate from the UK, Form 10F/Form 41, and No PE declaration (if applicable). Tax Deducted at Source u/s 195 is applicable to an honorarium paid to a UK non‑resident since services were performed in India.
• To apply for DTAA benefit, the following documents should be obtained from the payee: Valid tax residency certificate paid by the UK. Form 10F and the No Permanent Establishment declaration, if applicable.
• Implications Where Guest Does Not Have PAN: In case a PAN is not available, provisions of Section 206AA generally require TDS deduction at 20%.
• However, as clarified by judicial precedents and CBDT circulars, Section 206AA does not override Double Taxation Avoidance Agreement provisions for nonresidents, provided Double Taxation Avoidance Agreement conditions are satisfied.
• Accordingly, If a Tax Residency Certificate and Form 10F / Form 41 are furnished, Tax Deducted at Source may be deducted at the Double Taxation Avoidance Agreement rate of 10%, even in the absence of PAN. If Double Taxation Avoidance Agreement documents are not furnished, Tax Deducted at Source shall be deducted at 20% as per Section 206AA.

GST Applicability on Honorarium Paid to UK Non‑Resident for Lecture Delivered in India

• Whether Goods and Services Tax is applicable on honorarium: Under Goods and Services Tax law, “services” include professional services such as lectures, seminars, and training.
• Since the supplier is a non‑resident, the recipient is in India, and the place of supply is India (lecture delivered in India). The transaction qualifies as an import of services u/s 2(11) of the Integrated Goods and Services Tax Act.
• Goods and Services Tax liability mechanism: Goods and Services Tax is payable under Reverse Charge Mechanism (Section 5(3) of Integrated Goods and Services Tax Act, read with Notification 10/2017‑Integrated Goods and Services Tax Act)
• Rate of Goods and Services Tax : IGST 18% (generally applicable on professional / lecturing services). An Indian recipient must be registered under Goods and Services Tax GST (or obtain registration) to discharge reverse charge mechanism liability. GST paid under the Reverse Charge Mechanism is eligible for ITC, subject to normal conditions.
• Conclusion—The company/NGO has the full file of all the conditions and has to comply with the Goods and Services Tax: Goods and Services Tax at 18% under Reverse Charge, which is applicable on the honorarium paid to the UK non‑resident for the lecture delivered in India.

In Summary

• Additional compliance and checkpoints are needed to remember that the NGO/company deducts Tax Deducted at Source u/s 195 and deposits it within the due date; NGO / Company obtains Tax Residency Certificate and Form 10F/Form 41, and they file Form 15CA/15CB (Chartered Accountant Certificate)
• We need to pay Integrated Goods and Services Tax under the Reverse Charge Mechanism, and then it will reflect the Reverse Charge Mechanism in GSTR‑3B; thereafter, NIPFP can claim ITC (if eligible). Chartered Accountant related to filling of From 15CA / 15CB (Chartered Accountant Certificate) to be filed prior to remittance and tax deducted at source to be deposited and reported as per statutory timelines.
• If any support is required from Rajput Jain and Associates, then feel free to let us know if you require assistance with Form 15CB certification, Double Taxation Avoidance Agreement documentation, or FEMA compliance.