23 April 2023
Section 195 of the Income Tax Act, 1961 lays down provisions for tax deductions for Non-Resident Indians (NRIs). This section focuses on tax rates and deductions on daily business transactions with a non-resident. Any amount generated through these business transactions is chargeable under Income Tax Act, 1961. This amount may or may not be income or profits. The certificate for remittance is compulsory.
Section 195 further mentions guidelines on avoiding a revenue loss arising out of a tax liability from a non-resident by the way of deducting the same amount from their payments at source. The payer, that is, the person remitting payments to a NRI, can any individual, Indians and international companies, Hindu Undivided Family (HUF), person with exempt income in India and juristic person with or without an income that is chargeable to tax in India. The payee, under Section 195, is any non-resident with a residential status that comes under the purview of Section 6 of the Income Tax Act, 1961.
For details refer: https://taxguru.in/income-tax/section-195-tds-non-resident-payments.html
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