Tds deduction % on technical service u/s 9(1)(vii) u/s 195
This query is : Resolved
15 November 2013
If an Indian co. is paying fees for technical services u/s 9(1)vii) to a Non Resident co. in USA, then at what rate should TDS be deducted u/s 195?
Please reply.
Please reply.
15 November 2013
Go to the following link:
https://www.caclubindia.com/experts/tds-rate-under-section195-740785.asp#.UoXG-RenyVE
https://www.caclubindia.com/experts/tds-rate-under-section195-740785.asp#.UoXG-RenyVE
15 November 2013
For more details you can also go to the following link:
http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17270
http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17270
15 November 2013
Thank you sir....but i am still unable to find the correct rate applicable.
27 July 2025
Sure! Here's a clear explanation for your query:
---
### TDS on Fees for Technical Services Paid to Non-Resident under Section 195
* **Section 9(1)(vii)** of the Income Tax Act defines "Fees for Technical Services" (FTS).
* When an Indian company pays fees for technical services to a **Non-Resident (NR)**, **Section 195** mandates deduction of TDS on the payment made.
---
### What is the TDS rate?
* **Basic TDS rate:** As per Income Tax Act, **30%** (plus applicable surcharge and cess) on the gross payment amount.
* **However, if a Double Taxation Avoidance Agreement (DTAA) exists between India and the Non-Resident’s country (here USA), the TDS rate will be as per DTAA provisions.**
* Under the **India-USA DTAA**, the rate on fees for technical services is generally **10%** (plus surcharge and cess).
---
### Important Notes:
* The **TDS should be deducted on the gross amount paid** without any deduction for expenses.
* The payer (Indian company) is required to deduct TDS at the applicable rate and deposit it with the Government.
* The Non-Resident can claim credit of this TDS against their final tax liability in their country.
* To avail of the DTAA rate, the Non-Resident must provide a **Tax Residency Certificate (TRC)** and/or Form 10F to the Indian company.
---
### Summary:
| Particulars | TDS Rate Without DTAA | TDS Rate Under India-USA DTAA |
| --------------------------------- | --------------------- | ----------------------------- |
| Fees for Technical Services to NR | 30% | 10% + surcharge & cess |
---
If you want, I can also help you draft a sample TDS deduction calculation or a letter requesting TRC from the foreign company.
---
---
### TDS on Fees for Technical Services Paid to Non-Resident under Section 195
* **Section 9(1)(vii)** of the Income Tax Act defines "Fees for Technical Services" (FTS).
* When an Indian company pays fees for technical services to a **Non-Resident (NR)**, **Section 195** mandates deduction of TDS on the payment made.
---
### What is the TDS rate?
* **Basic TDS rate:** As per Income Tax Act, **30%** (plus applicable surcharge and cess) on the gross payment amount.
* **However, if a Double Taxation Avoidance Agreement (DTAA) exists between India and the Non-Resident’s country (here USA), the TDS rate will be as per DTAA provisions.**
* Under the **India-USA DTAA**, the rate on fees for technical services is generally **10%** (plus surcharge and cess).
---
### Important Notes:
* The **TDS should be deducted on the gross amount paid** without any deduction for expenses.
* The payer (Indian company) is required to deduct TDS at the applicable rate and deposit it with the Government.
* The Non-Resident can claim credit of this TDS against their final tax liability in their country.
* To avail of the DTAA rate, the Non-Resident must provide a **Tax Residency Certificate (TRC)** and/or Form 10F to the Indian company.
---
### Summary:
| Particulars | TDS Rate Without DTAA | TDS Rate Under India-USA DTAA |
| --------------------------------- | --------------------- | ----------------------------- |
| Fees for Technical Services to NR | 30% | 10% + surcharge & cess |
---
If you want, I can also help you draft a sample TDS deduction calculation or a letter requesting TRC from the foreign company.
---
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