What does Tax withholding rate mean?

 It means, you do not pay the tax because you have claimed tax benefit treaty. If you are doing the business from any usa company from India, it means, you are getting income from USA. But you claim that it is ok, I am doing the business with USA company, but it does not mean, my income is from usa source. I claim, I earn from business in India. So, I am not party to pay income tax for getting my earning from same usa company.

For example,

A is USA company who is showing ads in your website. Your website in India and you are operating it from India. Now, USA tax authority wants to tax on your income 30%, you have to claim that, I give the space to A usa company for ads. So, it is my Indian company. So, I am submitting form W-8BEN-E and claiming not to tax on my income with withholding rate 30%

More easy example

You have building of 4 rooms in India. You have invested day and night for making this building. Now, A usa person comes in it and starts to live on Rent. 

USA person is very smart, he does not give fixed rent fees. He told me that he will give these rooms sub-rent and what will got rent, we will give 50-50. It was smart deal. 

I was ready to deal with it. My 50% is my Indian income whether he gives sub-rent to african or american. I do not care. Now, USA tax authority come to me and say to me pay tax. I say why

I am indian. My room are in India. I am providing service in India. I will pay tax to Indian Govt. not USA govt. I have submitted the form W-8BEN-E. Ok

Now, my website is my building for rent. I write contents in it. I give it rent to any usa media company. Same media company sub-rent to other advertisers. So, I have right tax withholding rate.