Tds on non-resident

This query is : Resolved

Jitendra M.Gurejani (Querist)
Follow

02 September 2011 Dear Sirs/Madam,
My query is if the assessee is non-resident company and if he want to deduct TDS under DTAA so my question is whether surcharge is applicable to that assessee if the Turnover proceeds exceeds Rs 1 Crore., or else or only flat rate of TDS is applicable.
Thanks & Regards

Jitendra M.Gurejani

Jitendra M.Gurejani (Querist)
Follow

15 September 2011 Please reply the above query

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
Follow

27 July 2025 Good question!

Here’s how **TDS and surcharge apply to non-resident companies under DTAA**:

---

### 1. **TDS Rate on Non-Resident under DTAA**

* When a non-resident company receives income from India (like interest, royalty, fees for technical services), **TDS is deducted at rates specified in the relevant Double Taxation Avoidance Agreement (DTAA)** between India and the country of residence of the non-resident.
* These rates are usually **lower than the normal domestic rates**.

---

### 2. **Is Surcharge applicable on Non-Residents under DTAA?**

* **No surcharge or cess is applicable on TDS deducted under DTAA rates.**
* The TDS rate under DTAA is a **final withholding rate** and typically applies on a **flat basis**, **without surcharge or cess**.
* This means, even if the turnover or income exceeds ₹1 crore or any threshold, **surcharge does not apply** on DTAA rates of TDS.

---

### 3. **If DTAA does not apply**

* If DTAA benefits are **not claimed** or applicable, then the **domestic TDS rates** apply.
* In such cases, **surcharge and cess** are added as per domestic law if the income exceeds the specified limits.

---

### **Summary:**

| Situation | TDS Rate | Surcharge Applicable? |
| -------------------------------------- | ------------------------- | ----------------------------- |
| Non-resident claiming DTAA benefit | As per DTAA (flat rate) | **No surcharge/cess** |
| Non-resident NOT claiming DTAA benefit | Domestic rate + surcharge | Yes, if income exceeds limits |

---

If you want, I can help you find the exact DTAA rate for a specific country or provide sample calculations. 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