Tds on salary

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2012 Dear Experts

Pls advice on below calculation

Gross Salary 320000/-per month
Less Profession Tax 200/-
TDS 30.3% 96960/-

Net payable: 222840/-

above salary is payable to forieng Director riseding in UK (PAN Not available)

If we apply for PAN whether he will get TDS benifit.

Pls advice.

@VaibhavJ

@VaibhavJ (Expert)
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07 December 2012 Hi

What do you mean by TDS benifit, can u clarify?

Thanks//Vaibhav

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2012 Hi

Whether he will get refund.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Got it! Here's the detailed explanation on TDS on salary paid to a foreign director residing in the UK without PAN, and whether applying for PAN affects TDS:

---

### 1. **TDS Rate without PAN:**

* When salary is paid to a foreign director (non-resident) **without PAN**, the **TDS rate is higher** — usually the **maximum marginal rate plus surcharge and cess**, which in your example is 30.3%.

* So, your TDS deduction at 30.3% is correct **if PAN is not available**.

---

### 2. **If PAN is applied and provided:**

* If the foreign director applies for and furnishes a **valid PAN**, then **TDS should be deducted at the normal applicable rate** based on the tax slab or DTAA provisions.

* For a foreign director, the income tax rate would be as per the relevant provisions and DTAA (if applicable), which may reduce the TDS rate.

* Hence, **applying for PAN can reduce the TDS rate and result in lower TDS deduction.**

---

### 3. **About TDS “Benefit” or Refund:**

* If higher TDS is deducted due to non-availability of PAN, the taxpayer (foreign director) can **file an Income Tax Return in India** and claim refund of the excess TDS deducted.

* So yes, obtaining PAN and furnishing it timely helps avoid higher TDS deduction upfront and reduce cash flow issues.

* Without PAN, higher TDS is deducted; with PAN, normal rates apply.

---

### **Summary:**

| Situation | TDS Rate | Refund / Benefit |
| ---------------------------- | ----------------------------------- | ------------------------------------------- |
| Foreign director without PAN | Higher rate (e.g., 30.3%) | Can claim refund by filing ITR |
| Foreign director with PAN | Normal rate (based on slab or DTAA) | Lower TDS deducted, no excess refund needed |

---

**In your case:**

* Gross salary = ₹3,20,000/month
* Profession tax = ₹200
* TDS deducted @30.3% = ₹96,960 (without PAN)

If PAN is furnished, TDS could be deducted at a lower rate, helping the director avoid excess TDS upfront.

---

If you want, I can help draft a communication to the foreign director explaining the importance of PAN or help you with the calculation based on DTAA rates. Would that help?

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