F&F payment related TDS deduct on 195

F&F payment has been made to an employee who worked from April 2024 to June 2024 and is now (from July 2024) transferred to the USA unit.
Could you please confirm whether TDS should be deducted under Section 195 (Non-Resident) or not for this F&F payment?
Replies (1)

Yes, TDS should be deducted under Section 195 (Non-Resident) for the F&F (Full and Final) payment made to the employee. Reasons: 1. _Employee's status_: Although the employee worked in India from April 2024 to June 2024, they are now transferred to the USA unit, making them a non-resident in India. 2. _Payment nature_: F&F payment is considered a "salary" or "wages" and is subject to TDS under Section 195 for non-residents. 3. _Section 195 applicability_: As the employee is now a non-resident, Section 195 applies, requiring TDS deduction on the F&F payment. 4. _Tax treaty benefits_: If the USA has a tax treaty with India, the employee might be eligible for tax benefits. However, this doesn't exempt the employer from deducting TDS under Section 195. To ensure compliance, deduct TDS under Section 195 (Non-Resident) for the F&F payment made to the employee. Consult a tax professional or chartered accountant for guidance on the applicable tax rates and procedures.

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