{"id":24753,"date":"2019-09-19T19:45:38","date_gmt":"2019-09-19T14:15:38","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=24753"},"modified":"2019-09-19T17:05:03","modified_gmt":"2019-09-19T11:35:03","slug":"tds-on-non-resident-indians-section195-income-tax-act","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/tds-on-non-resident-indians-section195-income-tax-act\/","title":{"rendered":"TDS on Non-Resident Indians: Section 195 of the Income Tax Act, 1961"},"content":{"rendered":"<p><strong>Introduction<\/strong><\/p>\n\n\n\n<p class=\"has-drop-cap\">In the present era of globalization,\nthere are minimal restrictions on the boundaries for business and their\ntransactions.&nbsp; Businesses are not\nrestricted to one country and are spreading all over the world with a\nlarge number of transactions taking place daily. For transactions that take-place\ninter-country, it becomes difficult to check the country under whose tax regime\nsuch transaction would be taxed. <\/p>\n\n\n\n<div class=\"shadow1\">In India, Section 195 of the Income Tax Act, 1961 deals with the determination of the applicable Rate of Tax on eligible income &amp; deductions that can be made on business transactions with Non-residents Indians. NRI can later claim the refund while filing his Income Tax Return.<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Who are Non-Resident Indians?<\/strong><\/h2>\n\n\n\n<p>Residential Status of an\nassessee depends upon the period of stay in India in previous years. The period\nof stay is counted for each financial year that starts from 1<sup>st<\/sup>\nApril and ends on 31<sup>st<\/sup> March of every year.<\/p>\n\n\n\n<p>An individual is said to be <strong><em>Resident of India <\/em><\/strong><em>if he<\/em> has stayed in India for the following period<strong><em>:<\/em><\/strong><\/p>\n\n\n\n<ol><li>For 182 days or more in that relevant year<\/li><\/ol>\n\n\n\n<p><strong>OR<\/strong><\/p>\n\n\n\n<ul><li>For a period of full 1\nyear out of 4 years preceding to relevant year and at least 60 days in a\nrelevant previous year.<\/li><\/ul>\n\n\n\n<div class=\"shadow1\">In case an assessee doesn&rsquo;t satisfy any of the above-mentioned criteria, he\/she will be treated as Non-Resident Indian (NRI) for the relevant previous year under review.<\/div>\n\n\n\n<p>It is\ncompulsory to check the residential status of Payee when the payment is\nmade by an Indian payer. <strong>Section 195 would be applicable in those cases where the payee is NRI<\/strong>. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Section 195- An Overview<\/strong><\/h2>\n\n\n\n<p>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 <strong>NRI<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/NRI\">[1]<\/a><\/sup> or any international transaction entered into with an NRI is subjected to tax &amp; deductions that are regulated by this section.<\/p>\n\n\n\n<div class=\"shadow1\">This section applies to the assessee who has the residential status of an NRI and has any source of income from India during the period under review. The Income Tax Act lays down the provisions for deducting the tax at source when the payment is initiated by an Indian payer for making such payment to an NRI. The TDS is implemented on such a transaction to avoid the loss of revenue of the Indian Government.<\/div><br>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Defining Payer &amp; Payee for the\napplicability of Section 195<\/strong><\/h3>\n\n\n\n<p><strong>The payer is the person<\/strong> who makes the payment to an NRI or remits payment and deducts TDS to deposit with the tax authority. The\nfollowing can be the payer as per Section 195\nof the Income Tax Act:<\/p>\n\n\n\n<ul><li>An individual<\/li><li>HUF<\/li><li>Partnership firms<\/li><li>Non-Residents<\/li><li>Foreign Companies<\/li><li>Any individual that has\nexempted income in India<\/li><li>Any juristic person\nirrespective of his income taxable in India or not<\/li><\/ul>\n\n\n\n<p><strong>The payee is an individual<\/strong> 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.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><a href=\"https:\/\/enterslice.com\/income-tax-return-filing\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" loading=\"lazy\" width=\"730\" height=\"90\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/08\/INCOME-TAX-ADVISORY.png\" alt=\"INCOME TAX ADVISORY\" class=\"wp-image-23055\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/08\/INCOME-TAX-ADVISORY.png 730w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/08\/INCOME-TAX-ADVISORY-300x37.png 300w\" sizes=\"(max-width: 730px) 100vw, 730px\"\/><\/a><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Methods of Deducting Tax at Source under\nSection 195<\/strong><\/h3>\n\n\n\n<p>Following are the ways\nof deducting TDS as per the provisions of this section:<\/p>\n\n\n\n<ul><li>As per section 203A of the Income Tax act, 1961, TAN is mandatory for deducting TDS. A buyer should obtain the TAN (Tax Deduction Account Number) before claiming tax deductions. TAN can be obtained by applying online in Form 49B. For submitting the form, a buyer should have PAN (Permanent Account Number) of himself as well as that of NRI (Payee).<\/li><li>As per the provisions of this section, it is mandatory to mention all the details of TDS deductions &amp; applicable rates of TDS in the deed of all the transactions made between the payer &amp; NRI payee.<\/li><li>TDS deducted shall be paid through Challan or form number on or before the 7<sup>th<\/sup> of the succeeding month on which the TDS is deducted.<\/li><li>Such TDS has to be deposited in the banks that are authorized by the Income Tax Departments or through the Government of India for the collection for <strong>Direct Tax<\/strong>. <\/li><li>Such a deposit of TDS has to be made by the payer.<\/li><li>After deducting tax at source, the payer needs to file the quarterly return.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Filing of TDS Return<\/strong><\/h2>\n\n\n\n<p>After the deposit of the\nTDS by the payer as per the provisions of section 195, he\/she has to file a return pertaining to the same. Such a return\nis filed online through Form 27Q. TDS return is filed quarterly. Following are the dates of filing TDS for every quarter:<\/p>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td>\n  <strong>Tax deducted in the\n  Quarter<\/strong>\n  <strong>&nbsp;<\/strong>\n  <\/td><td>\n  <strong>Due date of filing\n  return<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>&nbsp;<\/strong>\n  <strong>1<sup>st<\/sup> April- 30<sup>th<\/sup> June<\/strong>\n  <strong>&nbsp;<\/strong>\n  <\/td><td>\n  &nbsp;\n  15<sup>th<\/sup> July\n  <\/td><\/tr><tr><td>\n  <strong>&nbsp;<\/strong>\n  <strong>1<sup>st<\/sup> July-30<sup>th<\/sup> September<\/strong>\n  <strong>&nbsp;<\/strong>\n  <\/td><td>\n  &nbsp;\n  15<sup>th<\/sup>\n  October\n  <\/td><\/tr><tr><td>\n  <strong>&nbsp;<\/strong>\n  <strong>1<sup>st<\/sup> October-31<sup>st<\/sup> December<\/strong>\n  <strong>&nbsp;<\/strong>\n  <\/td><td>\n  &nbsp;\n  15<sup>th<\/sup>\n  January\n  <\/td><\/tr><tr><td>\n  <strong>&nbsp;<\/strong>\n  <strong>1<sup>st<\/sup> January-31<sup>st<\/sup> March<\/strong>\n  <strong>&nbsp;<\/strong>\n  <\/td><td>\n  &nbsp;\n  15<sup>th<\/sup> May\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p>After filing the return, the payer can issue a TDS certificate that is also known as <strong><em>Certificate of deduction of Tax or Form 16 <\/em><\/strong>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.<br><\/p>\n\n\n\n<div class=\"read\"><p><b>Also Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/types-income-tax-return-filing-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">All Types of Income Tax Return Filing In India<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Introduction In the present era of globalization, there are minimal restrictions on the boundaries for business and their transactions.&nbsp; 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 [&hellip;]<\/p>\n","protected":false},"author":24,"featured_media":24763,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1473,2435],"tags":[2756,2755],"acf":{"service_id":"0"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>TDS on Non-Resident Indians: Section 195, Income Tax Act - Enterslice<\/title>\n<meta name=\"description\" content=\"Section 195 of the Income Tax Act, 1961 deals with the determination of the applicable Rate of Tax on eligible TDS on Non Resident Indians.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/tds-on-non-resident-indians-section195-income-tax-act\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"TDS on Non-Resident Indians: Section 195, Income Tax Act - Enterslice\" \/>\n<meta property=\"og:description\" content=\"Section 195 of the Income Tax Act, 1961 deals with the determination of the applicable Rate of Tax on eligible TDS on Non Resident Indians.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/tds-on-non-resident-indians-section195-income-tax-act\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-09-19T14:15:38+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-09-19T11:35:03+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/09\/Section-195-on-TDS.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Savvy Midha","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/10\/Savvy-Midha.jpg","authorDescription":"\"Savvy Midha holds the degrees of Bachelor of Commerce(honors), LL.B and Company Secretary. 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