Query on tds u/s 195 for payment to non residents

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This query is : Resolved

PRADEEP SUBRAMANI (Querist)

29 July 2011 One of our client is rendering internet advertising services for foreign clients. My client is a partnership firm.

Our client also paying for some services to non resident individuals. This amount is in small sums varying from $5 to $40 paid thro credit card of one of the partners. The number of such payment are around 20 to 25 per month.

I would like to point out that, the firm is doing business through internet and there is no direct contact to or from Service providers or service vendors. The receipts are through Paypal account or direct credit to the bank account of the firm.

We would like to know that, whether TDS is applicable U/s 195

If yes, to whom the firm or the partner

Please guide me with reference to sections and case laws.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

30 July 2011 Assuming that the petty payments are made by the partner to the foreign service providers.

The recipients are non residents and paid out side India for the income which is arising to them outside India.

In my view as the income of NR Recipients is no way taxable in India.

Let's have a view of foreign tax experts also in this regard.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

19 July 2025 Yes, TDS under Section 195 is applicable even for small payments made to non-residents if the payment is chargeable to tax in India under the Income Tax Act, subject to relevant DTAA and beneficial provisions.

Whether TDS is applicable does not depend on the mode of payment or the amount, but on the nature of the payment and whether it's taxable in India.

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