Tds in case of non resdent
This query is : Resolved
22 August 2013
Helloo..I am Working for a Client. He has a web Designing Business ( IT Sector). Mostly he Receives payment Outside From India Thorough paypal. And He also Do payment outside India in Small Amount and To many Persons for the Development of Website and other Works.
Now The question arise What and where and at what Rate TDS get applicable In this Case and If he is Liable to Deduct TDS ( section 195 ,TDS in case of Non resident) then How he will Claim Back those TDS.
Now The question arise What and where and at what Rate TDS get applicable In this Case and If he is Liable to Deduct TDS ( section 195 ,TDS in case of Non resident) then How he will Claim Back those TDS.
22 August 2013
Yes sec 195 will be applicable if he makes payment to non resident for receiving web design services from them.
He cannot claim back such tds as it mandatory to deduct and pay to central govt within prescibed time limit.
He cannot claim back such tds as it mandatory to deduct and pay to central govt within prescibed time limit.
22 August 2013
that means 30% will be incurred as a Additional Cost to the Assessee..
But I think there must be Some way out to Claim back TDS.
But I think there must be Some way out to Claim back TDS.
27 July 2025
Here's the clear picture about **TDS on payments to Non-Residents under Section 195**:
---
### 1. **Applicability of TDS under Section 195:**
* When your client (resident in India) makes payment to a **non-resident (NR)** for services (like web designing, development, etc.), **TDS must be deducted** under Section 195.
* This includes payments to foreign companies or individuals providing services from outside India.
---
### 2. **TDS Rate:**
* Generally, the TDS rate on payment to non-residents is **30% (plus applicable surcharge and cess)** on the gross amount unless a lower rate is specified under the applicable **Double Taxation Avoidance Agreement (DTAA)** between India and the country of residence of the payee.
* So, it could be less than 30% if the DTAA provides for a lower rate and the non-resident furnishes a Tax Residency Certificate (TRC).
---
### 3. **TDS Deduction is Mandatory:**
* It is **mandatory for the Indian payer to deduct TDS** before making the payment to the non-resident.
* Failure to deduct TDS or deposit it on time can lead to interest and penalty.
---
### 4. **Claiming Refund of TDS:**
* The **Indian payer cannot claim refund** of the TDS deducted under Section 195. The tax deducted is deposited with the government.
* **The non-resident payee** can claim credit or refund of the TDS by filing their **income tax return in India**, and based on their total income and DTAA benefits, they may get a refund or credit.
* If the TDS deducted is more than the actual tax liability of the non-resident, refund can be claimed by the non-resident taxpayer from the Indian Income Tax Department.
---
### 5. **How to Reduce TDS Burden:**
* Your client can apply to the **Assessing Officer (AO) under Section 195(2)** to get a certificate for **lower or nil deduction of TDS** if the actual tax liability is expected to be less than the 30% rate.
* The AO may grant a certificate allowing deduction at a lower rate or no deduction.
---
### Summary:
| Aspect | Details |
| -------------------- | -------------------------------------------------- |
| Applicable Section | Section 195 |
| TDS Rate | 30% (plus surcharge and cess), or lower under DTAA |
| Who deducts TDS | Indian resident payer |
| Refund of TDS | Claimed by non-resident after filing return |
| Option to reduce TDS | Apply to AO under Section 195(2) |
---
If your client wants, I can help draft the application for lower deduction or guide on DTAA provisions relevant to their case. Would you like that?
---
### 1. **Applicability of TDS under Section 195:**
* When your client (resident in India) makes payment to a **non-resident (NR)** for services (like web designing, development, etc.), **TDS must be deducted** under Section 195.
* This includes payments to foreign companies or individuals providing services from outside India.
---
### 2. **TDS Rate:**
* Generally, the TDS rate on payment to non-residents is **30% (plus applicable surcharge and cess)** on the gross amount unless a lower rate is specified under the applicable **Double Taxation Avoidance Agreement (DTAA)** between India and the country of residence of the payee.
* So, it could be less than 30% if the DTAA provides for a lower rate and the non-resident furnishes a Tax Residency Certificate (TRC).
---
### 3. **TDS Deduction is Mandatory:**
* It is **mandatory for the Indian payer to deduct TDS** before making the payment to the non-resident.
* Failure to deduct TDS or deposit it on time can lead to interest and penalty.
---
### 4. **Claiming Refund of TDS:**
* The **Indian payer cannot claim refund** of the TDS deducted under Section 195. The tax deducted is deposited with the government.
* **The non-resident payee** can claim credit or refund of the TDS by filing their **income tax return in India**, and based on their total income and DTAA benefits, they may get a refund or credit.
* If the TDS deducted is more than the actual tax liability of the non-resident, refund can be claimed by the non-resident taxpayer from the Indian Income Tax Department.
---
### 5. **How to Reduce TDS Burden:**
* Your client can apply to the **Assessing Officer (AO) under Section 195(2)** to get a certificate for **lower or nil deduction of TDS** if the actual tax liability is expected to be less than the 30% rate.
* The AO may grant a certificate allowing deduction at a lower rate or no deduction.
---
### Summary:
| Aspect | Details |
| -------------------- | -------------------------------------------------- |
| Applicable Section | Section 195 |
| TDS Rate | 30% (plus surcharge and cess), or lower under DTAA |
| Who deducts TDS | Indian resident payer |
| Refund of TDS | Claimed by non-resident after filing return |
| Option to reduce TDS | Apply to AO under Section 195(2) |
---
If your client wants, I can help draft the application for lower deduction or guide on DTAA provisions relevant to their case. Would you like that?
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