Chetan Chauhan
Quick Summary
Section 195 of the Income Tax Act of India pertains to the deduction of tax at source on certain incomes received by a non-resident or a foreign company. Under this section, the payer is required to deduct tax at the applicable rate when making payment to the non-resident or foreign company. The tax
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FAQ :
Section 195 of the Income Tax Act of India deals with the deduction of tax at source (TDS) on certain incomes paid to non-residents or foreign companies.
The payer, who is a resident in India, is responsible for deducting tax at the applicable rate when making payments to a non-resident or a foreign company.
Section 195 covers payments made by a resident in India to a non-resident or foreign company for various incomes, including investment income, capital gains, interest on foreign currency borrowings, royalty, and fees for technical services.
TDS rates vary depending on the type of income. For example, income from investment by an NRI citizen is taxed at 20%, long-term capital gains at 10% or 15%, and other incomes at 30%.
The payer must deposit the tax deducted to the credit of the Central Government and obtain a Tax Deduction and Collection Account Number (TAN). They also need to furnish a TDS return to the Income Tax Department.
The non-resident or foreign company is required to report the income in their tax return and claim credit for the tax that has been deducted at source.
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