Tds for digital marketing

Save Share

This query is : Resolved

roshan (Querist)

16 July 2018 Hello,
I have some confusion about the digital marketing field.
if the publisher is from our of India and we have to deduct TDS for mobile apps publishing, what will be the TDS percentage for same?

CA Mayur Todmal

CA Mayur Todmal (Expert)

16 July 2018 194C either 1 or 2% depends on type of payee

roshan

roshan (Querist)

16 July 2018 Someone has advised me it'll take 20%, is it correct?

CA Mayur Todmal

CA Mayur Todmal (Expert)

16 July 2018 if you are paying to Indian Company having pan tds will be 2%/1%

roshan

roshan (Querist)

16 July 2018 Thanks you, have one more doubt, what if we have to pay to foreign clients?

roshan

roshan (Querist)

17 July 2018 Thanks you, have one more doubt, what if we have to pay to foreign clients?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

27 July 2025 Great question about TDS for digital marketing payments, especially involving foreign clients! Here's a breakdown:

---

### 1. **Payment to Indian Publishers (Digital Marketing/Apps)**

* If the publisher is an **Indian entity or individual**, TDS is deducted under **Section 194C (Contractor payments)** or sometimes **194J (Professional fees)** depending on nature of payment.
* Rates usually are:

* **1% or 2% under 194C**, depending on payee type (individual/HUF or others)
* **10% under 194J** for professional/technical services

---

### 2. **Payment to Foreign Clients/Publishers**

* For payments to **non-resident (foreign) publishers**, TDS is governed by **Section 195** of the Income Tax Act.
* The applicable TDS rate depends on:

* **Nature of payment** (royalty, fees for technical services, business profits, etc.)
* **DTAA (Double Taxation Avoidance Agreement)** between India and the foreign country.

---

### 3. **Common Scenarios for Digital Marketing / Mobile App Publishing**

* **If payment is for royalty or technical services:**

* TDS rate could be **10%, 15%, 20% or lower** depending on DTAA.
* For example, US-India DTAA typically provides 15% on royalties.
* **If payment is business income (not royalty or fees for technical services):**

* Generally, no TDS if business profits are not deemed to accrue or arise in India (depending on presence of PE—Permanent Establishment).

---

### 4. **What if No PAN or No DTAA?**

* If the foreign payee has **no PAN**, TDS rate defaults to **20%** or the rate specified in DTAA, whichever is higher.
* If no DTAA, the default **Section 195 TDS rate of 30%** applies, but practically, 20% is often cited.

---

### 5. **Steps to Follow**

* Verify nature of payment: royalty, fees for technical services, or business profits.
* Check if the payee is resident or non-resident.
* Check applicable DTAA provisions.
* Deduct TDS at the correct rate under Section 195.
* Deposit TDS and file TDS return.
* Provide TDS certificate (Form 16A or equivalent) to payee.

---

### **Summary**

| Payee Type | TDS Section | Rate | Notes |
| ----------------- | ----------- | ------------------------------ | -------------------------------- |
| Indian Publisher | 194C/194J | 1% / 2% / 10% | Based on nature of payment |
| Foreign Publisher | 195 | Varies (10-20% or as per DTAA) | Check DTAA and nature of payment |
| No PAN (Foreign) | 195 | 20% | Higher rate applies if no PAN |

---

If you want, I can help you look up the exact DTAA rate for a specific country or prepare a summary for your payment case. Just let me know!

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