TDS on Foreign Remittance to NR
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
09 March 2010
Is TDS required to be deducted on remittance to non - residents towards inspection fees/lab testing charges for Lab testing of fabric samples or any other king of services which were used for the purpose of export of goods outside India or for earning of income from a source outside India?
What are the tax provision on above transaction ?
Is such transaction falls under the exception category of section 9(vii)(b)?
Please explain me section 9(vii)(b) of ITS and some examples which falls under this provision and TDS implicaiton under this provision.
What are the tax provision on above transaction ?
Is such transaction falls under the exception category of section 9(vii)(b)?
Please explain me section 9(vii)(b) of ITS and some examples which falls under this provision and TDS implicaiton under this provision.
09 March 2010
NO TDS IS NOT REQUIRED TO BE DEDUCTED U/S195 IF SERVICES ARE RECEIVED OUTSIDE INDIA.
Querist : Anonymous
Querist :
Anonymous
(Querist)
16 March 2010
Is TDS required to be deducted on remittance to non - residents towards inspection fees/lab testing charges for Lab testing of fabric samples or any other king of services which were used for the purpose of export of goods outside India or for earning of income from a source outside India?
What are the tax provision on above transaction ?
Is such transaction falls under the exception category of section 9(vii)(b)?
Please explain me section 9(vii)(b) of ITS and some examples which falls under this provision and TDS implicaiton under this provision.
What are the tax provision on above transaction ?
Is such transaction falls under the exception category of section 9(vii)(b)?
Please explain me section 9(vii)(b) of ITS and some examples which falls under this provision and TDS implicaiton under this provision.
27 July 2025
Here’s a detailed explanation regarding your query on TDS on foreign remittance for inspection fees/lab testing charges paid to non-residents, especially in the context of Section 9(1)(vii)(b) of the Income Tax Act:
---
### 1. **Is TDS required on remittance to non-residents for inspection fees/lab testing charges?**
* **If the services are rendered outside India**, and the payment is for services **used exclusively for the purpose of export of goods outside India or for earning income from a source outside India**, then:
* **No TDS is required to be deducted under Section 195**.
* This is because the **income of the non-resident does not accrue or arise in India** when services are rendered outside India and used for export.
---
### 2. **What is Section 9(1)(vii)(b)?**
* Section 9(1)(vii)(b) of the Income Tax Act says that income of a non-resident **shall be deemed to accrue or arise in India** if it is received or is deemed to be received in India or accrues or arises to a non-resident **from business connection in India**.
* **However**, if the income is received for services used **for the purpose of export of goods out of India** or for earning income from a source outside India, such income is **excluded** from deemed accrual in India.
---
### 3. **Examples that fall under Section 9(1)(vii)(b) exceptions:**
* Inspection fees paid to a foreign lab for testing fabric samples **used exclusively for export purposes**.
* Fees paid to a foreign consultant for services related to earning income from outside India.
* Charges paid to a foreign agency for services rendered outside India for processing goods exported from India.
---
### 4. **TDS Implication:**
* Since the income does **not accrue or arise in India** as per the exception under Section 9(1)(vii)(b), **TDS under Section 195 is not applicable**.
* This means the Indian payer is **not required to deduct tax at source** on such payments.
---
### **Summary Table:**
| Nature of Payment | Services Rendered In India? | Used for Export / Foreign Income? | TDS Applicability under Sec 195 |
| ------------------------------------------ | --------------------------- | --------------------------------- | ------------------------------- |
| Inspection/lab testing fees to foreign lab | No | Yes | No |
| Consultancy fees to foreign consultant | No | Yes | No |
| Other foreign services used for export | No | Yes | No |
| Services rendered in India | Yes | Irrelevant | Yes |
---
If you want, I can help draft a formal note or reply explaining this position for your client or internal use. Would you like that?
---
### 1. **Is TDS required on remittance to non-residents for inspection fees/lab testing charges?**
* **If the services are rendered outside India**, and the payment is for services **used exclusively for the purpose of export of goods outside India or for earning income from a source outside India**, then:
* **No TDS is required to be deducted under Section 195**.
* This is because the **income of the non-resident does not accrue or arise in India** when services are rendered outside India and used for export.
---
### 2. **What is Section 9(1)(vii)(b)?**
* Section 9(1)(vii)(b) of the Income Tax Act says that income of a non-resident **shall be deemed to accrue or arise in India** if it is received or is deemed to be received in India or accrues or arises to a non-resident **from business connection in India**.
* **However**, if the income is received for services used **for the purpose of export of goods out of India** or for earning income from a source outside India, such income is **excluded** from deemed accrual in India.
---
### 3. **Examples that fall under Section 9(1)(vii)(b) exceptions:**
* Inspection fees paid to a foreign lab for testing fabric samples **used exclusively for export purposes**.
* Fees paid to a foreign consultant for services related to earning income from outside India.
* Charges paid to a foreign agency for services rendered outside India for processing goods exported from India.
---
### 4. **TDS Implication:**
* Since the income does **not accrue or arise in India** as per the exception under Section 9(1)(vii)(b), **TDS under Section 195 is not applicable**.
* This means the Indian payer is **not required to deduct tax at source** on such payments.
---
### **Summary Table:**
| Nature of Payment | Services Rendered In India? | Used for Export / Foreign Income? | TDS Applicability under Sec 195 |
| ------------------------------------------ | --------------------------- | --------------------------------- | ------------------------------- |
| Inspection/lab testing fees to foreign lab | No | Yes | No |
| Consultancy fees to foreign consultant | No | Yes | No |
| Other foreign services used for export | No | Yes | No |
| Services rendered in India | Yes | Irrelevant | Yes |
---
If you want, I can help draft a formal note or reply explaining this position for your client or internal use. Would you like that?
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