Tds deduction % on technical service u/s 9(1)(vii) u/s 195

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Sushant Mahajan (Querist)
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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.

Ajay Mishra

Ajay Mishra (Expert)
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15 November 2013 Go to the following link:

https://www.caclubindia.com/experts/tds-rate-under-section195-740785.asp#.UoXG-RenyVE

Ajay Mishra

Ajay Mishra (Expert)
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15 November 2013 For more details you can also go to the following link:

https://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17270

Sushant Mahajan

Sushant Mahajan (Querist)
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15 November 2013 Thank you sir....but i am still unable to find the correct rate applicable.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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27 July 2025 Sure! Here's a clear explanation for your query:

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### 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.

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### 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).

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### 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.

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### Summary:

| Particulars | TDS Rate Without DTAA | TDS Rate Under India-USA DTAA |
| --------------------------------- | --------------------- | ----------------------------- |
| Fees for Technical Services to NR | 30% | 10% + surcharge & cess |

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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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