SECTION 195-TDS ON FOREIGN PAYMENTS

FORM 27D

Step1.               Bill received or payment to be made.

Step2.               Send bill to CA.

Step3.               CA will issue certificate in form 15CB mentioning rate of TDS.

Step4.               On the basis of 15CB fill online 15CA.

Step5.               Submit both 15CA/15CB to bank.

Step6.               Bank makes payment

Few important points keep in mind before deducting TDS:

ü  Whether the income of foreigner is taxable in India, if answer is No, then no need to deduct TDS, just file form 15CA on income tax site

To judge whether the Income is Taxable in India, one has to check the following things:

ü  Section 9 of Income Tax Act 1961

ü  DTAA between India & foreign country

PAN:

Ordinarily in terms of Section 206AA of the IT Act, if a person entitled to receive any income on which withholding tax is deductible does not furnish a Permanent Account Number ("PAN") to the person responsible for deducting such tax, in such case the tax is deducted at a higher tax rate of 20%. However, by virtue of Rule 37BC of the Income Tax Rules, 1962 the provisions of Section 206AA are not applicable to a non-resident, not having a PAN where payments received are in the nature of royalty or fees for technical services. The non-resident is however required to furnish the prescribed details and documents, including the name, email id, contact number, address in the country where such person is a resident, its tax identification number in the country of residence or such other unique identification number by which it is identified by the Government of its resident country (where the tax identification number is not available).

NOTIFICATION, CIRCULAR:

SUBJECT MATTER	NO.	LINK
Changes in requirement to furnish form 15CA & 15CB-Relaxation [17.12.2015]	Press Release	Link

CASE LAWS:

1.      Reimbursement of expense to NR without income component isn’t chargeable to tax; not liable to TDS. [Link]