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In the present era of globalization,
there are minimal restrictions on the boundaries for business and their
transactions. Businesses are not
restricted to one country and are spreading all over the world with a
large number of transactions taking place daily. For transactions that take-place
inter-country, it becomes difficult to check the country under whose tax regime
such transaction would be taxed.
Table of Contents
Residential Status of an
assessee depends upon the period of stay in India in previous years. The period
of stay is counted for each financial year that starts from 1st
April and ends on 31st March of every year.
An individual is said to be Resident of India if he has stayed in India for the following period:
compulsory to check the residential status of Payee when the payment is
made by an Indian payer. Section 195 would be applicable in those cases where the payee is NRI.
Tax Deducted at Source (TDS) is the primary source of collection of tax by Government departments. This section covers the TDS on the income of Non-Residents. Any payment made to an NRI or any international transaction entered into with an NRI is subjected to tax & deductions that are regulated by this section.
The payer is the person who makes the payment to an NRI or remits payment and deducts TDS to deposit with the tax authority. The
following can be the payer as per Section 195
of the Income Tax Act:
The payee is an individual who is a Non-Resident Indian as per section 6 of the Income Tax Act, 1961. The income of an NRI arising in India is subject to TDS under this section. All types of assessee like corporate, individual or any other entity can be payee under this section.
Following are the ways
of deducting TDS as per the provisions of this section:
After the deposit of the
TDS by the payer as per the provisions of section 195, he/she has to file a return pertaining to the same. Such a return
is filed online through Form 27Q. TDS return is filed quarterly. Following are the dates of filing TDS for every quarter:
After filing the return, the payer can issue a TDS certificate that is also known as Certificate of deduction of Tax or Form 16 to the NRI payee. Such a certificate has to be issued within 15 days of the due date of filing of TDS return, for the particular quarter.
Also Read: All Types of Income Tax Return Filing In India.
"Savvy Midha holds the degrees of Bachelor of Commerce(honors), LL.B and Company Secretary. She is an experienced Legal and Financial writer with expertise in research, drafting, and copy-writing."
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