TDS ON FEE PAID TO NON RESIDENT FOR PUBLISHING (no hard copy) A RESEARCH PAPER IN FOREIGN JOURNAL

Hi Basant — your situation involves TDS on payment to a foreign journal for publishing a research paper, specifically the Article Processing Charge (APC). Let’s clarify whether TDS was rightly deducted, and what can be done now.

🧾 Summary of Your Case:

• You paid APC to a foreign publisher (based in Switzerland).

• The publisher only provides online access — no physical printing.

• Your office deducted 20% TDS under Section 195 and paid the net amount.

• The journal is now asking for full payment, i.e., they’re treating the TDS deduction as a short payment.

✅ Key Tax Issues:

1. Is TDS required on APC paid to a foreign journal?

✅ Yes, TDS under Section 195 is applicable on any payment to a non-resident, if it is chargeable to tax in India.

But the real question is: Is this APC taxable in India for the foreign publisher?

Under the Income Tax Act + DTAA (India-Switzerland), taxation depends on:

• Whether the payment is for royalty, fees for technical services, or business income

• Whether the foreign entity has a permanent establishment (PE) in India

🔍 Is APC taxable in India?

Most tax experts and courts have held that APC for online journal publication:

• Is not royalty, because there’s no transfer of copyright

• Is not technical service, as it lacks human intervention or consultancy

• Is not taxable in India if the foreign publisher has no PE in India

📌 Therefore, in most cases:

APC paid to a foreign publisher for open-access online publication is not taxable in India, and hence no TDS should be deducted.

⚠️ What Went Wrong?

• Your office deducted 20% TDS, treating it as taxable income for the publisher.

• But the publisher:

  • Does not have a PAN in India

  • Cannot claim credit unless you gross up the payment or

  • Issue a Form 10F and Tax Residency Certificate (TRC) to apply DTAA relief

✅ What You Can Do Now:

Option 1: Gross up the payment and bear the TDS

• If the APC was €1,000 and 20% TDS deducted (i.e., you paid only €800), gross up:

  • Net = 80% → Gross = 100%

  • Gross = €800 / 0.8 = €1,000

  • TDS = €200 (your cost)

• You deposit the TDS to the govt, and do not recover it from the publisher.

✅ This keeps things smooth and avoids compliance issues.

Option 2: Seek Refund or Relief via CA Certificate

• Get a Chartered Accountant certificate (Form 15CB + 15CA) stating:

  • Payment is not chargeable to tax in India

  • Based on DTAA with Switzerland and no PE in India

• If accepted by your accounts team, no TDS is required, and the publisher can be paid in full.

• You may need to revise the TDS return and claim refund of the ₹ already deducted.

✍️ Sample Clarification to Journal:

“As per Indian tax regulations, tax is to be withheld on payments to non-residents only if such income is taxable in India. We deducted TDS on a conservative basis. However, we are open to grossing up the payment or issuing appropriate documentation (e.g., TRC or 10F form) if you wish to claim treaty benefits or tax credits in your home country.”

✅ Final Takeaway: