Tds Deduction

This query is : Resolved

Malcome M Bandya (Querist)
Follow

05 October 2009 Dear

Tds Deduction on foreign payment how much TDS will be deducted on following.

1. Professional fees raised by foreign company
2. Service Maintainance work done by foreign company.

please give the actual rate of TDS to be deducted.

Please Advise

Regards,

Malcome

Shyam Lal Naik

Shyam Lal Naik (Expert)
Follow

05 October 2009 Right.

A word of caution.

1. You need to deduct Edn cess(2%) and SHEC (1%), in case of tds deducted from salary and payment to non residents.

2. You need to deducted surcharge also in case of tds deducted from payment non resident company.

K V Subba Rao

K V Subba Rao (Expert)
Follow

05 October 2009 You are right. Amendment came into force with effect from Payments made from 1st Apr 09

(Refer Para 159.6.3 of 32nd edition of Singahania's Ready Reckoner)

Malcome M Bandya

Malcome M Bandya (Querist)
Follow

08 October 2009 Dear

We have paid Excess Amount in Service tax Category - Business Auxiliary Services. Can we adjust this excess amount in the another Category - i.e. Maintenance or Repair Service or any other category for future payments.

Please advise.

Regards,

Malcome Bandya.

Malcome M Bandya

Malcome M Bandya (Querist)
Follow

04 December 2009 Tds Deduction on foreign payment how much TDS will be deducted on following.

1. Professional fees raised by foreign company
2. Service Maintainance work done by foreign company.

please give the actual rate of TDS to be deducted.

Please Advise

Regards,

Malcome

Malcome M Bandya

Malcome M Bandya (Querist)
Follow

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

27 July 2025 Hi Malcome,

Regarding **TDS deduction on payments to foreign companies**, here’s the general guidance:

### 1. Professional fees paid to a foreign company:

* **TDS rate** under **Section 195** is generally **10%** (plus applicable surcharge and cess).
* However, the exact rate depends on the **Double Taxation Avoidance Agreement (DTAA)** between India and the foreign company’s country.
* Professional fees often attract **10% plus surcharge and education cess** (if applicable).

### 2. Service maintenance work done by foreign company:

* Again, **Section 195** applies here.
* TDS rate is typically **10% plus surcharge and cess**, unless a different rate is specified under DTAA.
* If it qualifies as royalties or technical fees under the DTAA, different rates may apply.

---

### Important Points:

* **Surcharge and Education Cess** apply on TDS amount.
* From April 1, 2009, **surcharge (2% or 5%) and cess (3%)** are applicable on TDS deducted on payments to non-residents.
* You should check if the foreign company has a **Tax Residency Certificate (TRC)** to avail lower DTAA rates.
* Deduct TDS **before remittance** and deposit with Indian tax authorities.
* File **Form 27Q** (quarterly TDS return for non-residents).

---

If you want, I can help you with detailed rates based on the country or nature of services. Just share that info!

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now