TDS Deduction

TDS is deductable. The TDS Certificate that country's company would give to other persons like you, would be the document to be shown by you.

The foreign company cannot deduct income tax on income that accrues to you in India as a resident Indian (all the TDS u/s 192-194) unless they have a PE in India. What they can deduct is tax on income accrued to you in their country (source country).

Any business or professional income will suffer their witholding tax especially if you have a PE in the source country. However, certain incomes will suffer witholding tax irrespective of whether you have the PE in the source country or not. Some examples are royalties, fees for professional and technical services. All these circumstances are specified in the respective DTAA India signed with most countries. FYI in all these agreements, definition of technical services includes managerial and secretarial services.

In many of these DTAAs it is specified that if the services rendered by the person of the other contracting state is for personal use by the payer from the source state, then the source state will not withold tax. As most businesses will be booking the expenditure they will deduct the witholding tax at the rate specified in DTAA or their own tax law, whichever is more beneficial to you.

You should sign an agreement with your payer specifying the nature of your work and keep the foreign exchange inward remittance certificate handy. The payer will send you TDS certificate as per their laws.

In your ITR return there are columns asking whether any income is as per DTAA with any country. You will check Yes.

You have to claim relief (no refunds) from the Indian Income Tax on that particular income. Assuming that you receive a professional fee of USD 10000 from USA. As per DTAA with USA, you will suffer USD 1500 witholding tax. If you are in 30% tax bracket, your Indian income Tax would be USD 3000/- on this income. It couldbe lower after deducting expenses of your business. It could be lower also if your income is in the lower slabs. If the final indian income tax on this income works out below USD 1500, you pay nothing and you get no refund from Indian government. If it is above 1500, you pay the difference to the Indian Government who has the right to assess your business or profession being resident in India. This means only relief, no refund.

im a CA final student .doing my intern i have a Query about remittances for education purpose. what will be the tax applicability if i do remittances to  my brother in United states ,from my savings bank account to his bank account for his Education purpose.as i dont have any income source????