section 195
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
18 February 2010
Sir/Mam,
as per provision of sec 195 of income tax act, any payment made to a Non Resident is liable for deducting tax. Hence in case, interest received from bank on savings a/c by Non Resident, whether bank is liable for deducting tax?
or in case, Rent received by Non Resident, tenant is liable to deduct tax? Here i just want to know the exact meaning of 'Any Payment'.
as per provision of sec 195 of income tax act, any payment made to a Non Resident is liable for deducting tax. Hence in case, interest received from bank on savings a/c by Non Resident, whether bank is liable for deducting tax?
or in case, Rent received by Non Resident, tenant is liable to deduct tax? Here i just want to know the exact meaning of 'Any Payment'.
18 February 2010
Yes bank will deduct TDS if it crosses the limit.Any payment includes credit to the account of the payee by book entry also.
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Querist : Anonymous
Querist :
Anonymous
(Querist)
19 February 2010
Payment by an individual Tenant whether he is liable to deduct TDS?
23 July 2025
Under Section 195 of the Income Tax Act, 1961, the provisions related to the deduction of Tax at Source (TDS) apply on any payment made to a non-resident or foreign company. Let's break down the queries:
1. Interest Received by Non-Resident from Bank (on Savings Account):
Interest income is subject to TDS under Section 195 when paid to a non-resident.
However, the bank is only liable to deduct TDS if the interest exceeds the specified threshold limit set by the government. For non-residents, the interest income would generally be taxable in India, and the TDS will be deducted at the rate specified under Section 195 or as per the applicable DTAA (Double Taxation Avoidance Agreement).
Important: TDS will apply if the interest exceeds the prescribed limit (for example, Rs. 10,000 for interest income on savings accounts), and if the interest is being paid to a non-resident.
2. Rent Received by Non-Resident (Tenant's Obligation to Deduct TDS):
Rent paid to a non-resident is also subject to TDS under Section 195.
The tenant (payer of rent) is liable to deduct TDS if the rent exceeds the prescribed limit. The TDS rate will again depend on the nature of the payment and whether a Double Taxation Avoidance Agreement (DTAA) applies.
In simple terms, the tenant is responsible for deducting TDS on the rent paid to a non-resident, provided the rent is subject to taxation in India.
DTAA Impact: If there is a DTAA between India and the non-resident’s country, the TDS rate may be reduced as per the treaty provisions.
3. Meaning of 'Any Payment' under Section 195:
The term "any payment" includes:
Cash payments
Payments made through bank transfer
Credit to the account of the payee by book entry (even if no physical payment is made but the amount is credited to the non-resident's account, TDS will be applicable).
In short, "any payment" means all kinds of payments, including cash, cheque, bank transfers, or even journal entries that are credited to a non-resident's account.
4. TDS by Individual Tenant:
If the tenant is an individual (not a business or company), and if they are making a payment of rent to a non-resident, the individual is still liable to deduct TDS as per Section 195, provided the rent exceeds the specified limit.
For an individual tenant, the TDS obligation applies under the same conditions as for a corporate or business entity tenant. However, if the tenant is paying rent to a non-resident, and the amount exceeds the prescribed limit, the individual tenant is required to deduct TDS.
5. In Summary:
Interest on a savings account paid to a non-resident is subject to TDS if it exceeds the limit.
Rent paid by a tenant to a non-resident is also subject to TDS if it exceeds the prescribed limit.
The term "any payment" includes cash, bank transfers, and book entries credited to the payee’s account.
Individual tenants are also required to deduct TDS when paying rent to a non-resident.
1. Interest Received by Non-Resident from Bank (on Savings Account):
Interest income is subject to TDS under Section 195 when paid to a non-resident.
However, the bank is only liable to deduct TDS if the interest exceeds the specified threshold limit set by the government. For non-residents, the interest income would generally be taxable in India, and the TDS will be deducted at the rate specified under Section 195 or as per the applicable DTAA (Double Taxation Avoidance Agreement).
Important: TDS will apply if the interest exceeds the prescribed limit (for example, Rs. 10,000 for interest income on savings accounts), and if the interest is being paid to a non-resident.
2. Rent Received by Non-Resident (Tenant's Obligation to Deduct TDS):
Rent paid to a non-resident is also subject to TDS under Section 195.
The tenant (payer of rent) is liable to deduct TDS if the rent exceeds the prescribed limit. The TDS rate will again depend on the nature of the payment and whether a Double Taxation Avoidance Agreement (DTAA) applies.
In simple terms, the tenant is responsible for deducting TDS on the rent paid to a non-resident, provided the rent is subject to taxation in India.
DTAA Impact: If there is a DTAA between India and the non-resident’s country, the TDS rate may be reduced as per the treaty provisions.
3. Meaning of 'Any Payment' under Section 195:
The term "any payment" includes:
Cash payments
Payments made through bank transfer
Credit to the account of the payee by book entry (even if no physical payment is made but the amount is credited to the non-resident's account, TDS will be applicable).
In short, "any payment" means all kinds of payments, including cash, cheque, bank transfers, or even journal entries that are credited to a non-resident's account.
4. TDS by Individual Tenant:
If the tenant is an individual (not a business or company), and if they are making a payment of rent to a non-resident, the individual is still liable to deduct TDS as per Section 195, provided the rent exceeds the specified limit.
For an individual tenant, the TDS obligation applies under the same conditions as for a corporate or business entity tenant. However, if the tenant is paying rent to a non-resident, and the amount exceeds the prescribed limit, the individual tenant is required to deduct TDS.
5. In Summary:
Interest on a savings account paid to a non-resident is subject to TDS if it exceeds the limit.
Rent paid by a tenant to a non-resident is also subject to TDS if it exceeds the prescribed limit.
The term "any payment" includes cash, bank transfers, and book entries credited to the payee’s account.
Individual tenants are also required to deduct TDS when paying rent to a non-resident.
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