{"id":311,"date":"2022-09-21T07:04:17","date_gmt":"2022-09-21T07:04:17","guid":{"rendered":"https:\/\/komplytek.com\/blogs\/?p=311"},"modified":"2022-09-21T10:43:06","modified_gmt":"2022-09-21T10:43:06","slug":"tds-in-case-of-non-resident-section-195","status":"publish","type":"post","link":"https:\/\/komplytek.com\/blogs\/tds-in-case-of-non-resident-section-195\/","title":{"rendered":"TDS In case of Non-Resident \u2013 Section 195"},"content":{"rendered":"<body><p><span style=\"font-weight: 400;\">An assesses total income earned during the previous year is taxable in the assessment year, i.e., the year following the financial year. However, tax has to be paid in the previous year itself in the form of TDS, TCS, and advance tax.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">TDS refers to tax deduction at source, which is required to be deducted by the person at the time of making payments like salary, rent, commission, professional fees, interest etc. and deposit the same with the government on or before the due date. A fixed percentage is defined in the Income Tax Act 1961 for the purpose of TDS.<\/span><\/p>\n<p id=\"mcetoc_1gdfea0472\"><b>Here we are looking at the TDS in the case of payment to a non-resident.<\/b><\/p>\n<p><b>Section 195<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Section 195 is applicable to any individual (resident or non-resident) who is making payment of interest or any other amount chargeable to tax (except payments under section 194 LB, section 194 LC, and salary payments outside India) to an individual non-resident or foreign company. Such a person is liable to deduct tax at the rate specified by the Income Tax Act 1961. This helps to reduce the revenue loss by deducting the tax while making the payment to a non-resident. Furthermore, the payer is required to furnish the details of payment in the form as prescribed by the Central Board of Direct Taxes.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For the purpose of this section, \u201cpayer\u201d can be any person. Here, \u201cany person\u201d includes both residents and non-residents. The residential status of a payee can be determined as per section 6 of the Income Tax Act 1961.<\/span><\/p>\n<p><b>Section 194 LB of the Income Tax Act 1961 deals with the provisions relating to income by way of interest from the Infrastructure Debt Fund.<\/b><\/p>\n<p><b>Section 194LC of the Income Tax Act 1961 deals with the provisions relating to income by way of interest from an Indian company or business trust.<\/b><\/p>\n<p><b>Time of Deduction<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Any person who is making payment to a non-resident individual or foreign company is required to <a href=\"https:\/\/komplytek.com\/\">deduct TDS<\/a> at the time of credit of such income to the payee\u2019s account or whichever comes first, at the time of payment.<\/span><\/p>\n<p><b>Rates for the Deduction of TDS<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The following are the TDS rates given under section 195:<\/span><\/p>\n<p>\u00a0<\/p>\n<table width=\"512\" height=\"264\">\n<tbody>\n<tr>\n<td style=\"text-align: center; width: 451.729px;\"><b>Particulars<\/b><\/td>\n<td style=\"text-align: center; width: 59.2708px;\"><b>Rate of TDS<\/b><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 451.729px; text-align: left;\"><span style=\"font-weight: 400;\">Income from investments made by NRI<\/span><\/td>\n<td style=\"text-align: center; width: 59.2708px;\"><span style=\"font-weight: 400;\">20%<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 451.729px; text-align: left;\"><span style=\"font-weight: 400;\">Long-term capital gain income for NRIs as defined by section 115E<\/span><\/td>\n<td style=\"text-align: center; width: 59.2708px;\"><span style=\"font-weight: 400;\">10%<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 451.729px; text-align: left;\"><span style=\"font-weight: 400;\">Income from long-term capital gain (Listed shares and Securities as per section 112A)<\/span><\/td>\n<td style=\"text-align: center; width: 59.2708px;\"><span style=\"font-weight: 400;\">10%<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 451.729px; text-align: left;\"><span style=\"font-weight: 400;\">Additional long-term capital gain<\/span><\/td>\n<td style=\"text-align: center; width: 59.2708px;\"><span style=\"font-weight: 400;\">\u00a0 \u00a020%<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 451.729px; text-align: left;\"><span style=\"font-weight: 400;\">Short-term capital gain as per section 111A\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/td>\n<td style=\"text-align: center; width: 59.2708px;\"><span style=\"font-weight: 400;\">\u00a0 \u00a0 15%<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 451.729px; text-align: left;\"><span style=\"font-weight: 400;\">Interest imposed on foreign currency loans\u00a0\u00a0<\/span><\/td>\n<td style=\"text-align: center; width: 59.2708px;\"><span style=\"font-weight: 400;\">\u00a0 \u00a0 20%<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 451.729px; text-align: left;\"><span style=\"font-weight: 400;\">Royalty or fees for technical services payable by the Government or an Indian Concern\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/td>\n<td style=\"text-align: center; width: 59.2708px;\"><span style=\"font-weight: 400;\">\u00a0 \u00a010%<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 451.729px; text-align: left;\"><span style=\"font-weight: 400;\">Winning from lotteries, crossword puzzles, horse races, card games, and any other such Games\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/td>\n<td style=\"text-align: center; width: 59.2708px;\"><span style=\"font-weight: 400;\">\u00a0 \u00a0 \u00a0 30%<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 451.729px; text-align: left;\"><span style=\"font-weight: 400;\">Any other income source\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/td>\n<td style=\"text-align: center; width: 59.2708px;\"><span style=\"font-weight: 400;\">\u00a0 \u00a0 30%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>\u00a0<\/p>\n<p><span style=\"font-weight: 400;\">The above rates are given as per Finance Act 2022 and a cess of 4% &amp; surcharge is added as applicable.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The payee can choose between the rates specified in the Finance Act 2022 and the rates specified in the Double Taxation Avoidance Agreement (DTAA), whichever is more advantageous to the payee. Furthermore, no surcharges or less are required to be added to the DTAA rates.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, if the payee fails to furnish the PAN to the payer, then the payer will be required to <a href=\"https:\/\/komplytek.com\/contact.php\">deduct TDS<\/a> at higher rates as per section 206AA.<\/span><\/p>\n<p><b>Threshold limit to deduct TDS<\/b><\/p>\n<p><span style=\"font-weight: 400;\">There is no threshold limit for deducting TDS. TDS shall be deducted on all types of payments as prescribed under section 195.<\/span><\/p>\n<p><b>Why should you choose Komplytek?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The auditing service provided by Komplytek entails reviewing all of the client\u2019s financial information and ascertaining its accuracy. We provide unparalleled audit services, including assessing internal controls, testing financial data, and gauging fraud dangers. We also seek to deliver accurate financial accounts and manage the company\u2019s financial assets. In order to enhance your company operations, we give factual observations with the highest honesty.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Komplytek is at your service if you are seeking high-caliber feedback on your company procedures. In addition to trustworthy, high-quality evaluation services, we provide our clients with high-quality audit methods. Our experts are up-to-date with the latest technologies in the audit practice. Our tax and audit assurance services include:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Internal Audit before finalization of books<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Statutory Audit<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Stock Audit<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Assets Audit<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Any client-specific financial audits or compliance audits.<\/span><\/li>\n<\/ol>\n<p>\u00a0<\/p>\n<\/body>","protected":false},"excerpt":{"rendered":"<p>An assesses total income earned during the previous year is taxable in the assessment year, i.e., the year following the financial year. However, tax has to be paid in the previous year itself in the form of TDS, TCS, and advance tax. TDS refers to tax deduction at source, which is required to be deducted &#8230; <a title=\"TDS In case of Non-Resident \u2013 Section 195\" class=\"read-more\" href=\"https:\/\/komplytek.com\/blogs\/tds-in-case-of-non-resident-section-195\/\" aria-label=\"Read more about TDS In case of Non-Resident \u2013 Section 195\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":309,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[40],"tags":[42,125,43],"class_list":["post-311","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-itr","tag-income-tax","tag-tax","tag-tax-audit"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>TDS In case of Non-Resident \u2013 Section 195 - Komplytek Blogs<\/title>\n<meta name=\"description\" content=\"TDS is a tax deduction that is made at the source of income. 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