TDS Rates for N.R.I us 195
TDS Rates for Non-Residents and Foreign Companies (FY 2024-25)
| 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. |
Important Considerations
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.
- If a non-resident claims benefits under a DTAA, the payer must obtain the necessary documentation, such as:
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 Calculation
Example 1: Royalty Payment to a Foreign Company
- Royalty Amount: ₹20,00,000
- TDS Calculation:
- TDS = ₹20,00,000 × 40% = ₹8,00,000
- Net Amount Received:
- ₹20,00,000 – ₹8,00,000 = ₹12,00,000
Example 2: Dividend Payment to a Non-Resident
- Dividend Amount: ₹10,00,000
- TDS Calculation:
- TDS = ₹10,00,000 × 20% = ₹2,00,000
- Net Amount Received:
- ₹10,00,000 – ₹2,00,000 = ₹8,00,000
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