Tds rate under section195
This query is : Resolved
06 August 2011
I WANT TO KNOW CURRENT TDS RATE UNDER SECTION 195 IS IT 10.5575 % OR 10.506 %
07 August 2011
There is not a single rate U/s 195. For each kind of income payable to a non-resident, there is a separate rate.
Further rates are different for Non-Resident Non-Corporates and Non-Domestic companies.
For AY 2011-12 No surcharge is applicable to Non-corporate payees. However for non domestic companies surcharge is @2.5%.
EC and SHEC will also be applied.
Further rates are different for Non-Resident Non-Corporates and Non-Domestic companies.
For AY 2011-12 No surcharge is applicable to Non-corporate payees. However for non domestic companies surcharge is @2.5%.
EC and SHEC will also be applied.
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07 August 2011
The TDS rate depends on various sections. Now which section is applicable to you for the purpose of 195. If it is Interest then 194A if it is contract then 194C and so on. The rates as applicable to the Indian Section is the rate applicable for 195. Only after TDS you can remit the money and the same is the case of service tax if services are render in Indian then it is applicable
07 August 2011
Sections like 194 A or 194C as illustrated by expert CA Shri S S Agarwal are applicable to Residents only and I do not agree with his prescribed methodology.
However, you have to specifically take the rates prescribed for Non residents only for Deduction U/s 195.
However, you have to specifically take the rates prescribed for Non residents only for Deduction U/s 195.
07 August 2011
The rate for royalty and fee for technical services under sec 115A applicable for TDS deduction u/s 195 is 10.506%
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08 August 2011
Reference to Sec.195 specifies that
Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or any other sum chargeable under the provisions of Income Tax Act (not being income chargeable under the head “Salaries” ) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force.
The rates in force as such would apply according to the nature of payment as well as the category of payee with further consideration of DTAA, etc.
TAXATION OF FOREIGN COMPANIES
Since post assessment collection of taxes is difficult from a
non-resident assessee by virtue of his residence and business
activities being outside India, TDS is an imperative mode of tax
collection. In such cases the rate of TDS also equates the tax rate.
The estimated income approach in Section 44B to 44BBB relating
to taxation of certain categories of income in case of foreign
companies is lined with TDS as a mode of collection.
Section 195 provides for deduction of tax at source as per
rates in force which are specified in Annexure-1.
Following are the sections dealing with presumptive rate of
taxation in regard to income of foreign company. The tax payable
is deducted at the time of remittance.
Section Nature of Income % of gross receipt
Chargeable as Tax
and liable for TDS
115A Non-residents (Not a company) 20%
and foreign company : Dividends/
Interest/income from units
Foreign company : Royalty/fees for 30%
Technical services.
Note 1 : Lower rate provided in Double Taxation Avoidance
agreement would prevail over these rates wherever they exist.
Note 2 : The rate of 30% is reduced to 20% or 10% in respect of
royalty or fees for technical services depending on whether the
fees is received pursuant to an agreement made after 31.5.1997
but before 1.6.2005 or whether it is made on or after 1.6.2005. Now,
a foreign company deriving royalty and fees for technical services
have to bifurcate its royalties and fees into 3 parts as follows :-
a) Royalty and fees received pursuant to an agreement made on
or before 31.5.1997 and
b) Royalty and fees received pursuant to an agreement made
after 31.5.1997 but before 1.6.2005.
c) Royalty and fees received pursuant to an agreement made on
or after 1.6.2005.
On the first part, tax would be payable @30%; on the second
part, tax would be payable @ 20% and on the third part, tax would
be payable @10%.
Section /Nature of Income/ % of gross receipts
44B /Receipt from shipping business/ 7.5%
44BB/ Business of exploration of Mineral oils/ 10%
44BBA/ Business of operation of Air-craft/ 5%
44BBB/ Approved turn-key Power project/ 10%
Further surcharge is also to be levied @2.5% and Education + HEC @3% thereon subject to the deduction exceeds Rs. one crore.
Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or any other sum chargeable under the provisions of Income Tax Act (not being income chargeable under the head “Salaries” ) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force.
The rates in force as such would apply according to the nature of payment as well as the category of payee with further consideration of DTAA, etc.
TAXATION OF FOREIGN COMPANIES
Since post assessment collection of taxes is difficult from a
non-resident assessee by virtue of his residence and business
activities being outside India, TDS is an imperative mode of tax
collection. In such cases the rate of TDS also equates the tax rate.
The estimated income approach in Section 44B to 44BBB relating
to taxation of certain categories of income in case of foreign
companies is lined with TDS as a mode of collection.
Section 195 provides for deduction of tax at source as per
rates in force which are specified in Annexure-1.
Following are the sections dealing with presumptive rate of
taxation in regard to income of foreign company. The tax payable
is deducted at the time of remittance.
Section Nature of Income % of gross receipt
Chargeable as Tax
and liable for TDS
115A Non-residents (Not a company) 20%
and foreign company : Dividends/
Interest/income from units
Foreign company : Royalty/fees for 30%
Technical services.
Note 1 : Lower rate provided in Double Taxation Avoidance
agreement would prevail over these rates wherever they exist.
Note 2 : The rate of 30% is reduced to 20% or 10% in respect of
royalty or fees for technical services depending on whether the
fees is received pursuant to an agreement made after 31.5.1997
but before 1.6.2005 or whether it is made on or after 1.6.2005. Now,
a foreign company deriving royalty and fees for technical services
have to bifurcate its royalties and fees into 3 parts as follows :-
a) Royalty and fees received pursuant to an agreement made on
or before 31.5.1997 and
b) Royalty and fees received pursuant to an agreement made
after 31.5.1997 but before 1.6.2005.
c) Royalty and fees received pursuant to an agreement made on
or after 1.6.2005.
On the first part, tax would be payable @30%; on the second
part, tax would be payable @ 20% and on the third part, tax would
be payable @10%.
Section /Nature of Income/ % of gross receipts
44B /Receipt from shipping business/ 7.5%
44BB/ Business of exploration of Mineral oils/ 10%
44BBA/ Business of operation of Air-craft/ 5%
44BBB/ Approved turn-key Power project/ 10%
Further surcharge is also to be levied @2.5% and Education + HEC @3% thereon subject to the deduction exceeds Rs. one crore.
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13 August 2012
If a Indian company is making FTS payment to Foreign Company, then it would deduct TDS as per Act or DTA whichever is beneficial.
In my case, DTA prescribes 15% but as per section 115A fts rate is 10%.
So the Indian company would apply 10%( plus applicable surcharge and cess) since it is more benefical and deduct tds at that rate.
However, my query is for taking benefit of section 115A... does the agreement needs to be approved by central government...
(the wording of section specify thats y confused)...
In my case, DTA prescribes 15% but as per section 115A fts rate is 10%.
So the Indian company would apply 10%( plus applicable surcharge and cess) since it is more benefical and deduct tds at that rate.
However, my query is for taking benefit of section 115A... does the agreement needs to be approved by central government...
(the wording of section specify thats y confused)...
20 August 2012
No as per present policy of Govt of India whatever is allowed under FEMA is deemed to be aproved for the purpose of this section.
Anuj
femaquery@gmail.com
Anuj
femaquery@gmail.com
29 April 2013
I have to pay seminar fee to a german company to be held in germany. Delegate from our co. will attend the seminar in germany. German co. does not have any office in India.
Is TDS under 195 applicable?
Is TDS under 195 applicable?
29 April 2013
I have to pay seminar fee to a german company to be held in germany. Delegate from our co. will attend the seminar in germany. German co. does not have any office in India.
Is TDS under 195 applicable?
Is TDS under 195 applicable?
29 April 2013
No......
Anuj
femaquery@gmail.com
Anuj
femaquery@gmail.com
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