Trader
2616 Points
Posted on 05 December 2009
As per Indian Income Tax, you have to deduct TDS on such payments. However, depending on the country in which your employee is a resident, check the provision of the DTAA India has with at Country. Look under the Articles for 'Dependent Personal Services'. It could be numbered 14, 15 or 16 depending on the country. If the conditions are fullfilled for taxing the income in India, then deduct as per rates in force for salaries in India. If the DTAA provides that it is not taxable in India then you may give the payee the benefit of the provisions of the DTAA. However even if there is no tax you need to furnish Form 15CB and 15CA. If you deduct tax, the payee can get a relief from his country on the tax suufered in India on the Indian Income. If you have deducted excess or in case income is not taxable and you have deducted, then payee can file a return in India and claim refund. However in this case the relief he claims in his country is reduced by the amount of refund he gets here.