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Tds u/s 195

Deepak Tapse (Accounts Manager - Taxation)   (1764 Points)

16 May 2013  

W.e.f. 01/04/2013 TDS is applicable on Royalty payment made to foreign company by Indian Concern is 25%, as per DTAA TDS rate is 15%. My questtion is while filing e-TDS return there is no option to mention whether TDS deducted as per IT or DTAA. Is their any liability will arise if we deduct TDS rate as per DTAA i.e. 15% instead of 25% as per IT.

 9 Replies

Bharat chandan (student) (158 Points)
Replied 16 May 2013

TDS needs to be deducted u/s 195. If DTAA is more beneficial to the assessee then, assessee needs to obtain certificate from CA as explained under rule 37BB (15CB and online submission of form 15CA).


See the format of 15CB. Both rate you have to mention in 15CB and then deduct tax for the lowest rate. (whichever is more beneficial to assessee as per section 90).

Deepak Tapse (Accounts Manager - Taxation)   (1764 Points)
Replied 17 May 2013

Thanks Mr.Bharat

But my query is related to eTDS return in which if we do not mention PAN then higher rate is applicable i.e. 20%. Is their any liability will arise in this case?.


Bharat chandan (student) (158 Points)
Replied 21 May 2013

First of all if a person is non resident (lets take example of Company A) but having any tax liability in india then company A should have PAN.

If company is not having PAN then section 206AA will apply which states that if an assessee is not having PAN, then the rate of TDS would be higher of the following:


1. Rate specified in the Act.

2. Rate in force.

3. 20%



As the rate mentioned in the Act is higher i.e 25%, the TDS would be 25%.

Reply Soon

Lakshmi (Article) (35 Points)
Replied 04 September 2014

  1. What do we mean by rate in force u/s 206AA ?
  2. When PAN Is not available and other details such as TRC is available what is the rate we have to deduct? 


CA Gaurav Goyal (CA) (86 Points)
Replied 06 September 2014

What do we need to mention in our E-TDS Return for clarifying that the TDS Deducted is according to DTAA Lower rate otherwise department will raise TDS Demand notice on shorter deduction of TDS.

Bharat chandan (student) (158 Points)
Replied 15 September 2014

Nothing to be mention in E-TDS @ Mr. CA Gaurav Goyal.

I hope there is no such column in the RPU.


@ Lakshmi: for e.g if the rate is from finance Act or from circular, notification then it is known as rate in force.


If you like my comment then click on thanks user.

Rakesh Sharma (Manager ) (32 Points)
Replied 15 September 2014

Hi Everyone,

Mr. Bharat I am not agree with you at all , question remained unsolved the same by Mr. Deepak Tapse.

Mr. Deepak - Any Royalty Payment to non resident - by an Indian firm - Must be governed by section 195 and its provision .

''Section 195 is a self contained section and there are two different provisions for mitigation viz by the payer u/s 195 (2) and the payee u/s 195 (3)/section 197.

The payer can make an application to his respective Assessing Officer seeking permission to effect nil or lower deduction on a certain payment with cogent reasoning for the same in the application.''

The Route what Mr. Bharat has suggested kindly dont go by this , assesing officer at any point of time can deny the same.

Kindly dont put any rate in ETDS return please.





Bharat chandan (student) (158 Points)
Replied 18 September 2014

Dear Mr. Deepak You have posted this query a year ago. As per my understanding your query is what to do in e-TDS? There is now a solution to your query. There is now a separate column in e-TDS RPU that where the tax has been deducted as per DTAA or as per IT Act. And Mr. Rakesh before you suggest people not to follow my advise kindly read what you have suggested because as per my knowledge the section states that- where “the Assessing Officer is satisfied] that the total income16[***] of the recipient justifies the deduction of income-tax 17[***] at any lower rates or no deduction of income-tax” In my opinion in case where assessee has lower income he may opt for such certificate. As per my view if assessee knows that there is a difference In rate as per IT Act and DTAA, assessee should follow whichever is beneficial for assessee.(Refer section 90) and should obtained form as mentioned in my first suggestion (Refer Section 195 read with rule 37BB). And if you follow suggestion given by Mr. Rakesh not to mention anything in e-TDS, then my best wishes is always there with you. All the best and be prepare to face AO.

Omkar Kulkarni (Accountant) (35 Points)
Replied 28 April 2015


Is there any sepreate RPU for E-TDS return aganist foreign payment which was made U/S 195. I have not found any option for 195 in our regular RPU( in Excel Sheet) for E-TDS return filing?

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