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Applicability of TDS u/s.195

Vishal Bagmar (ITP) (50 Points)

24 July 2010

According to Sec.195 all payments made to any non-resident (Except Salary) is chargable to Tax.

My Question - Payment for purchase of Goods (Tangiable). Is it liable or not. If not please give proper explanation.

Thank you for your time.

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3 Replies

Suresh Sharma (Manager Finance & Admin.) (42 Points)
Replied 24 July 2010

Originally posted by : Vishal Bagmar
	Section 195 of the Income-tax Act, 1961 mandates deduction of income tax from payments made or credit given to non-residents at the rates in force. The Reserve Bank of India has also mandated that except in the case of certain personal remittances which have been specifically exempted, no remittance shall be made to a non-resident unless the person making the remittance furnishes an undertaking (addressed to the Assessing Officer) accompanied by a certificate from an Accountant in a specified format. The certificate and undertaking are to be submitted (in duplicate) to the Reserve Bank of India / authorised dealers who in turn are required to forward a copy to the Assessing Officer concerned (which is additional requirement in addition to the deduction of Income Tax). In your case it is not a personal remittance, hence TDS will be applicable

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SUDHIR & PRADEEP JI (CA FINAL+LLB + DISA) (2299 Points)
Replied 24 July 2010

EXCEPT PERSONAL REMITTANCE U/S 195 TDS IS APPLICABLE

Vishal Bagmar (ITP) (50 Points)
Replied 25 July 2010

Suresh & Pradeep Ji:

So if the A.O does not consider it as a purchase payment and considers it as a nature of personel remittance then i am liable to deduct tax at source u/s. 195. Am i right