TDS deduction.

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This discussion clarifies TDS deduction on payments made by individuals to Non-Resident Indians (NRIs), particularly concerning Code S1502 for goods purchases. TDS under Section 195 is generally applicable if the payment is taxable in India. However, if the payment is solely for goods, the NRI has no business connection in India, and the payment isn't taxable under Indian law or Double Taxation Avoidance Agreements, TDS may not be required. Even when no TDS is deductible, filing Form 15CA (Part D) is still necessary to declare this exemption.

Divyesh Ajmera

Divyesh Ajmera (Querist)

10 January 2025 Is TDS is deductible if payment reverse by individual to NRI by filing 15CA?
Code :- s1502

Sowmya.G

Sowmya.G (Expert)

11 January 2025 Can you provide more clarity? What is the reversal that you are mentioning?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

12 August 2025 ✅ Short Answer: YES — TDS may be applicable, depending on the nature of the payment and if it is taxable in India.
🔍 Detailed Explanation:
📌 What is Code S1502?
Code S1502 in Form 15CA/CB relates to:
"Remittance towards purchase of goods (not under import license)."

This is typically used for import payments or foreign purchases.

✅ TDS Applicability (Section 195 of Income Tax Act):
Section 195 says: Any person (including individual) making payment to an NRI or foreign entity that is chargeable to tax in India must deduct TDS.

If the amount is not taxable in India, no TDS is required.

📌 So, TDS is not required when:
Payment is purely for purchase of goods, and

There is no business connection/permanent establishment of the NRI in India, and

Payment is not taxable in India under the Income Tax Act or under DTAA (Double Taxation Avoidance Agreement)

✅ Form 15CA Filing:
Even if TDS is not required, Form 15CA (Part D) is still to be filed to declare no TDS based on the exemption.
If the amount exceeds the threshold or is taxable, Form 15CB (from CA) is also needed.

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