TDS on TDS payment

Yes as per section 195A income should be paid net of tax. So your payment should be grossed up and then TDS should be deducted. In this case the expense will be Rs. 111,111 and TDS Rs. 11,111/-. Net amount payable Rs. 100,000/- which has been paid already.

However in cases Refund to the person making payment under section 195 is allowed if income does not accrue to the non-resident. The amount paid into the Government account in such cases, is no longer ‘tax’. In view of this, no interest under section 244A is admissible on refunds to be granted in accordance with this Circular or on the refunds already granted in accordance with Circular No. 769.

Hello Aditya Sir,

I wnt to know If we do as Mr. Ashish have done then whether there can be any problem?

Proportianate expenses can be disallowed u/s 40(a)(ia) keeping in mind the spirit of the section