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TDS on Payment made to outside India

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CA ANKUSH DUBEY

15 Points Posted on 01 May 2021

Gross payment has been made to Company located at denmark for software consultancy charges in dollar through credit card, please suggest tds applicability in this case where payment has already been made in gross amount
,is tds required to be deposited under section 195 @ 25 percent

Replies (2)

Quick Summary

This discussion clarifies the applicability of Tax Deducted at Source (TDS) under Section 195 for payments made to entities outside India, such as software consultancy fees. It outlines the standard TDS rates for various services like dividends, royalties, and technical services, noting that these rates are subject to education cess and applicable surcharges. The discussion also highlights the importance of considering Double Taxation Avoidance Agreements (DTAA) for potentially more beneficial rates and addresses the scenario where payment has already been made in full.

CA. Sourav Sarkar

Chartered Accountant

24588 Points Posted on 01 May 2021

TDS should be deducted u/s 195.

Some Important rates mentioned in the Finance Act, 2020 for the purpose of withholding tax u/s.195 are as under:

Dividend–20%

Royalty–10%

Fees for technical services–10%

Interest (other than 194LB / 194LC / 194LD) –20%

The above rates shall be increased by education cess @ 4% and applicable surcharge to corporate / non-corporate assessee. Rates mentioned in DTAA should be applied if they are more beneficial.