In the year 2015, the Government of India has passed act no. 22 of 2015 to deal with the proble...
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.
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:
It is 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:
|Tax deducted in the Quarter||Due date of filing return|
|1st April- 30th June||15th July|
|1st July-30th September||15th October|
|1st October-31st December||15th January|
|1st January-31st March||15th May|
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.