TDS Rates for N.R.I us 195

Nature of Income	TDS Rate	Comments
Interest on Loans	40%	Interest paid to non-residents on loans. Subject to surcharge and cess if applicable.
Royalty	40%	Covers payments for intellectual property rights and services. Subject to DTAA rates if applicable.
Fees for Professional Services	40%	Includes fees for consulting, legal, technical, or other professional services.
Fees for Technical Services	40%	Similar to professional services, covers technical expertise and assistance.
Dividend	20%	TDS applicable on dividends distributed to foreign entities; no surcharge, subject to cess.
Long-term Capital Gains	20% (with indexation)	Applicable for gains from the sale of long-term assets; unlisted securities attract a flat 10% (without indexation).
Short-term Capital Gains	40%	For shares and securities; may vary for other assets.
Income from Sale of Property	40%	TDS applicable on the sale consideration if a non-resident sells property in India.
Other Income	40%	Income from investments or other sources.
Income from Sale of Shares	40%	For non-residents selling shares of Indian companies.
Income from Mutual Funds	40%	TDS applicable on income from mutual funds for non-residents.

TDS Applicability:
- TDS is applicable at the time of crediting the amount to the non-resident’s account or at the time of payment, whichever is earlier.
No TDS on Certain Payments:
- Payments made for goods or certain services may not attract TDS if they fall under exemptions specified under the Income Tax Act.
Double Taxation Avoidance Agreements (DTAA):
- If a non-resident claims benefits under a DTAA, the payer must obtain the necessary documentation, such as:
  - Tax Residency Certificate (TRC): Issued by the tax authority in the non-resident’s country.
  - Form 10F: To provide additional details regarding the non-resident’s claim.
Withholding Tax Compliance:
- The Indian resident making the payment is responsible for deducting TDS and ensuring compliance with the withholding tax regulations.
TDS Returns:
- TDS deducted on payments to non-residents must be reported in Form 27Q, and TDS certificates must be issued in Form 16A.
Late Payment and Penalties:
- If TDS is not deducted or deposited on time, penalties may apply, including interest on delayed payments (1% per month) and late fees.
No Permanent Establishment:
- If a non-resident does not have a permanent establishment (PE) in India, only the specified TDS rates apply. If they have a PE, domestic tax rates may apply to their business income.

Example 1: Royalty Payment to a Foreign Company

Example 2: Dividend Payment to a Non-Resident

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