Tds on salary.
Querist : Anonymous
Whether TDS will be deducted or not?
If yes, what will be the rate?
What will the treatment in Case of Non resident and resident?
Querist : Anonymous
Querist : Anonymous
Querist : Anonymous
Querist : Anonymous
DEPENDENT PERSONAL SERVICES of DTAA between India and UK it is not taxable in India it will be taxable in UK.
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### 1. **Is TDS applicable on salary paid outside India?**
* **Generally, under Indian Income Tax Act, salary income is taxable in India if it is “accruing or arising” or “deemed to accrue or arise” in India (Section 5 & Section 9).**
* If the salary is paid by an Indian company to an employee who is physically working and rendering services **outside India** (e.g., in a foreign branch), this salary is usually considered **not to accrue or arise in India**.
* Therefore, **such salary is not taxable in India** and TDS under section 192 is **not applicable**.
---
### 2. **What if the employee is a Resident or Non-Resident?**
* **Resident Employee:** Salary for services rendered abroad is taxable only if it accrues or arises in India or is received in India.
* **Non-Resident Employee:** Salary for services rendered outside India is generally not taxable in India.
---
### 3. **Role of DTAA (Double Taxation Avoidance Agreement) between India and UK**
* Article 16 (Dependent Personal Services) of India-UK DTAA typically provides that salary income of an employee is taxable in the country where the employee is physically employed and providing services.
* So, if the employee works in the UK branch and receives salary there, **taxation rights primarily lie with the UK**.
* India generally does **not** tax this salary under DTAA.
---
### 4. **If payment is made from India to the foreign branch employee:**
* If payment is routed through India (e.g., salary paid from Indian office to the employee abroad), there could be a question of TDS under **Section 195** (payment to Non-resident).
* However, since salary income is not taxable in India under section 9 and DTAA provisions, **TDS under section 195 need not be deducted** on salary paid for foreign services.
---
### **Summary:**
| Situation | TDS Deduction Required? | Applicable Section/Rate |
| ------------------------------------------------------------------------------------ | ----------------------- | ------------------------------------ |
| Salary paid by Indian company to employee working **in India** | Yes | Section 192 (TDS on salary) |
| Salary paid by Indian company to employee working **outside India** (foreign branch) | No | Not taxable in India, no TDS |
| Salary paid to NRI/non-resident abroad for foreign services | No | Not taxable, no TDS under Indian law |
---
**Note:** Always check the specific DTAA between India and the country concerned, as terms may vary.
---
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