"Fees for technical services" ("FTS") means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like projects.

As per Section 9(1)(vii) of Income Tax Act, income by way of 'fees for technical services' payable by a person who is a resident of India is deemed to accrue or arise in India (except where the fees are payable in respect of services utilized in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India).

The aforesaid FTS (which is taxable under the IT Act) are ordinarily subject to TDS @ 20% in terms of the IT Act. However, where payments are received by a non-resident who is entitled to the benefits of the double taxation avoidance agreement ("DTAA"), the non-resident is entitled to claim the benefit of the more beneficial provisions and rates between the IT Act and the DTAA between India and the country of residence of such non-resident. But in order to avail the benefit of DTAA the NRI should submit the TRC (Tax Residential Certificate) or PAN.