TDS on salary paid to Non resident

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Chintan Gosalia (Querist)
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08 October 2009 Hello Friends,

Please reply urgently to my query with proper links to any article or explanation provided on net.

My query is as follows : -
My company makes a salary payment to a foreigner ( non - resident till date). am i eligible to deduct tds on it ? if yes than how to calculate? she might be staying for 182 days or may be not staying.

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
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08 October 2009 You have to deduct Tax at source in the same manner as you deduct tax for resident employees i.e. if salary is over and above the tax free limit then tax will be at the applicable rate plus education and higher education cess.
Just calculate if she is going to earn taxable salary i.e > 1.90 lacs or not.

If salary is paid in fireign currency then follow rule 26

https://www.incometaxindia.gov.in/publications/2_TDS_On_Salaries/Chapter09.asp

Juzer Sadikot

Juzer Sadikot (Expert)
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14 October 2009 Dear Chintan,

Sanjay Sir is correct.

However it is to be noted that in case she is non resident by virtue of section 6 of IT Act (staying outside India for more than 182 days) then the maximum amount not chargeble to tax (Basic exepmtion limit) shall be Rs. 1,60,000/-

Also, if she qualifies to be Resident of other country with which India has DTAA, it is possible (remote chance) for treaty shoping under the head dependent services then she may get relief.

for e.g. Indo-US DTAA

Remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State, if :

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant taxable year ;

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State ; and

(c) the remuneration is not borne by a permanent establishment or a fixed base or a trade or business which the employer has in the other State.

Proper documentation need to maintained by the company before allowing such relief.

Thanks

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