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PAYMENTS TO NON-RESIDENTS [SECTION 195]

TDS ON PAYMENTS TO NON-RESIDENTS [SECTION 195]

Payment in respect of which tax is to be deducted

Payment to a non-resident or a foreign company of :

(a) any interest (not being interest referred to in section 194LB or 194LC or section 194LD), or

(b) any other sum chargeable to income-tax in India (not being salaries or dividends

Time of deduction of tax

At the time of credit of income to the account of payee, or at the time of payment thereof in cash or by issue of cheque or draft or at the time of transfer of amount subject to tax deduction to ‘suspense account’ or any other account, whichever is earliest.

In case of interest payable by the Government or a public sector bank within the meaning of clause (23D) of section 10 or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode.

Time of deposit of tax

When deduction is made on behalf of Government – On same day where tax is paid without production of income-tax challan and (b) on or before 7 days from end of month in which deduction is made, where tax is paid accompanied by an income-tax challan.

In other cases – On or before April 30th where the income or amount is credited or paid in the month of March and (b) in any other case, on or before 7 days from end of month in which deduction is made.

Certificate of tax deduction

Issue certificate in Form 16A as under :

Sl. No.

Date of ending of quarter of financial year

Due date

1.

June 30

August 15 of the financial year

2.

September 30

November 15 of the financial year

3.

December 31

February 15 of the financial year

4.

March 31

June 15 of the financial year immediately following the financial year in which the deduction is made.

If original Form 16A issued has been lost and deductee requests for issue of a duplicate certificate, a duplicate may be issued and such certificate should be certified as duplicate.

The certificate shall specify:—

  1. valid permanent account number (PAN) of the deductee;

  2. valid tax deduction and collection account number (TAN) of the deductor;

  3. (i) book identification number or numbers where deposit of tax deducted is without production of challan in case of an office of the Government; (ii) challan identification number or numbers in case of payment through bank;

  4. receipt number of the relevant quarterly statement of tax deducted at source.

Statement of tax deduction

Person deducting the tax shall, after depositing the tax, prepare and file quarterly statements in Form 27Q in respect of deductee who is a non-resident not being a company or a foreign company or resident but not ordinarily resident with the Director General of Income-tax (Systems) or the person authorized by him (NSDL). Form 27Q is to be furnished as under :

Sl. No.

Date of ending of quarter of financial year

Due date

1.

30th June

31st July of the financial year

2.

30th September

31st October of the financial year

3.

31st December

31st January of the financial year

4.

31st March

31st May of the financial year immediately following the financial year in which the deduction is made.

Rate of TDS

Section 195: Payment of any other sum to a Non-resident

 

a) Income in respect of investment made by a Non-resident Indian Citizen

20

b) Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen

 

10

c) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112

10

d) Income by way of long-term capital gains as referred to in Section 112A

10

e) Income by way of short-term capital gains referred to in Section 111A

15

f) Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33), 10(36) and 112A

20

g) Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC)

20

h) Income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to sub-section (1A) of Section 115A of the Income-tax Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of Section 115A of the Income-tax Act, to a person resident in India

10 

i) Income by way of royalty [not being royalty of the nature referred to point g) above E] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy

10

j) Income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy

10

k) Any other income

30

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