Payments to non-resident sportsmen or sports associations.
194E. Where any income referred to in section 115BBA is payable to a nonresident sportsman (including an athlete) who is not a citizen of India or a non-resident sports association or institution, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent.]
Other sums.
195. [(1)Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or any other sum chargeable under the provisions of this Act (not being income chargeable under the head “Salaries” shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :
[Provided that in the case of interest payable by the Government or a public sector bank within the meaning of clause (23D) of section 10 or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode :]
[Provided further that no such deduction shall be made in respect of any dividends referred to in section 115-O.]
Explanation.—For the purposes of this section, where any interest or other sum as aforesaid is credited to any account, whether called “Interest payable account” or “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]
(2) Where the person responsible for paying any such sum chargeable under this Act (other than salary) to a non-resident considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application to the [Assessing] Officer to determine,[by general or special order], the appropriate proportion of such sum so chargeable, and upon such determination, tax shall be deducted under sub-section (1) only on that proportion of the sum which is so chargeable.
[(3) Subject to rules made under sub-section (5), any person entitled to receive any interest or other sum on which income-tax has to be deducted under sub-section (1) may make an application in the prescribed form to the [Assessing] Officer for the grant of a certificate authorising him to receive such interest or other sum without deduction of tax under that sub-section, and where any such certificate is granted, every person responsible for paying such interest or other sum to the person to whom such certificate is granted shall, so long as the certificate is in force, make payment of such interest or other sum without deducting tax thereon under sub-section (1).
(4) A certificate granted under sub-section (3) shall remain in force till the expiry of the period specified therein or, if it is cancelled by the [Assessing] Officer before the expiry of such period, till such cancellation.
(5) The Board may, having regard to the convenience of assessees and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an application may be made for the grant of a certificate under sub-section (3) and the conditions subject to which such certificate may be granted and providing for all other matters connected therewith.]
[(6) The person referred to in sub-section (1) shall furnish the information relating to payment of any sum in such form and manner as may be prescribed by the Board.]
[Income in respect of units of non-residents.
196A. (1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any income in respect of units of a Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of India shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of twenty per cent :
[Provided that no deduction shall be made under this section from any such income credited or paid on or after the 1st day of April, 2003.]
(2) Notwithstanding anything contained in sub-section (1), no deduction of tax shall be made from any income payable in respect of units of the Unit Trust of India to a non-resident Indian or a non-resident Hindu undivided family, where the units have been acquired from the Unit Trust of India out of the funds in a Non-resident (External) Account maintained with any bank in India or by remittance of funds in foreign currency, in accordance, in either case, with the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and the rules made thereunder.
Explanation.—For the purposes of this section—
(a) “foreign currency” shall have the meaning assigned to it in the Foreign Exchange Regulation Act, 1973 (46 of 1973);
(b) “non-resident Indian” shall have the meaning assigned to it in clause (e) of section 115C;
(c) “Unit Trust of India” means the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963);
(d) where any income as aforesaid is credited to any account, whether called “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]
Certificate for deduction at lower rate.
197.(1)[Subject to rules made under sub-section (2A), [where, in the case of any income of any person [or sum payable to any person], income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the provisions of sections 192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194-I, 194J, 194K[, 194LA and 195, the Assessing Officer is satisfied] that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax , as the case may be, the [Assessing] Officer shall, on an application made by the assessee in this behalf, give to him such certificate as may be appropriate.
(2) Where any such certificate is given, the person responsible for paying the income shall, until such certificate is cancelled by the[Assessing] Officer, deduct income-tax at the rates specified in such certificate or deduct no tax, as the case may be.
[(2A) The Board may, having regard to the convenience of assessees and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an application may be made for the grant of a certificate under sub-section (1) and the conditions subject to which such certificate may be granted and providing for all other matters connected therewith.]
Consequences of failure to deduct or pay.
201.[(1) Where any person, including the principal officer of a company,—
(a) who is required to deduct any sum in accordance with the provisions of this Act; or
(b) referred to in sub-section (1A) of section 192, being an employer,
does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax:
Provided that no penalty shall be charged under section 221 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax.]
[(1A)Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct [the whole or any part of the tax] or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at [one per cent for every month or part of a month] on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid [and such interest shall be paid before furnishing [the statement] in accordance with the provisions of sub-section (3) of section 200].]
(2) Where the tax has not been paid as aforesaid after it is deducted, [the amount of the tax together with the amount of simple interest thereon referred to in sub-section (1A)] shall be a charge upon all the assets of the person, or the company, as the case may be, referred to in sub-section (1).
The following sub-sections (3) and (4) shall be inserted after sub-section (2) of section 201 by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2010 :
(3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of—
(i) two years from the end of the financial year in which the statement is filed in a case where the statement referred to in section 200 has been filed;
(ii) four years from the end of the financial year in which payment is made or credit is given, in any other case :
Provided that such order for a financial year commencing on or before the 1st day of April, 2007 may be passed at any time on or before the 31st day of March, 2011.
(4) The provisions of sub-clause (ii) of sub-section (3) of section 153 and of Explanation 1 to section 153 shall, so far as may, apply to the time limit prescribed in sub-section (3).
Withholding Tax Rates
[Tax rates applicable in India under ADT Agreement]
|
Dividend [not being covered by section 115-O] |
Interest |
Royalty |
Fees for technical service |
|||||
|
Right of State to tax |
Tax rate |
Right of State to tax |
Tax rate |
Right of State to tax |
Tax rate |
Right of State to tax |
Tax rate |
|
| Armenia | Both | 10% | Both | 10% | Both | 10% | Both | 10% |
| Australia | Both | 15% | Both | 15% | Both | [Note 3] | Both | [Note 3] |
| Austria | Both | 10% | Both | 10% | Both | 10% | Both | 10% |
| Bangladesh | Both | 10% (if at least 10% of the capital of the company paying the dividend is held by the recipient) | Both | 10% [Note 2] | Both | 10% |
No separate provision |
|
| Belarus | Both | 10% if paid to a company holding 25% shares; otherwise 15% | Both | 10% [Note 2] | Both | 15% | Both | 15% |
| Belgium | Both | 15% | Both | 15% (10% if granted by a bank) | Both | 10% | Both | 10% |
| Botswana | Both | 7.5% (if shareholder is a company and holds at least 25% shares in the investee-company); otherwise 10% | Both | 10% | Both | 10% | Both | 10% |
| Brazil | Both | 15% | Both | 15% [Note 2] | Both | 25% for use of trademark; 15% for others |
No separate provision |
|
| Bulgaria | Both | 15% | Both | 15% [Note 2] | Both | 15% of royalty relating to literary, artistic, scientific works other than films or tapes used for radio or television broadcasting; 20% in other cases | Both | 20% |
| Canada | Both | 15% if at least 10% of the shares of the company paying the dividends is held by the recipient of dividend; 25% in other cases | Both | 15% [Note 2] | Both | 10%-20% | Both | 10%-20% |
| China | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Cyprus | Both | 10% if at least 10% of the capital of the company paying dividend is held by the recipient, 15% in all other cases | Both | 10% [Note 2] | Both | 15% | Both | 10% |
| Czeck Republic | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Denmark | Both | 15% if at least 25% of the shares of the company paying the dividend is held by the recipient; 20% in other cases | Both | 10% if loan is granted by bank; 15% for others [Note 2] | Both | 20% | Both | 20% |
| Germany | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Finland | Both | 15% | Both | 10% [Note 2] | Both | 15%-20% during 1997-2001, 15% for subsequent years; 10% for equipment royalty | Both | Same as in case of royalty |
| France | Both | 10% | Both | 10% | Both | 10% | Both | 10% |
| Greece | Source | 20% | Source | 20% | Source | 30% |
No separate provision |
|
| Hungary | Both | 10% | Both | 10% | Both | 10% | Both | 10% |
| Indonesia | Both | 10% if at least 25% of the shares of the company paying the dividend is held by the recipient; 15% in other cases | Both | 10% [Note 2] | Both | 15% |
No separate provision |
|
| Iceland | Both | 10% | Both | 10% | Both | 10% | Both | 10% |
| Ireland | Both | 10%-15% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Israel | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Italy | Both | 15% if at least 10% of the shares of the company paying dividend is beneficially owned by the recipient company; 20% in other cases | Both | 15% [Note 2] | Both | 20% | Both | 20% |
| Japan | Both | 10% | Both | 10% | Both | 10% | Both | 10% |
| Jordan | Both | 10% | Both | 10% [Note 2] | Both | 20% | Both | 20% |
| Kazakstan | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Kenya | Both | 15% | Both | 15% [Note 2] | Both | 20% | Both | 17.5% |
| Korea | Both | 15% if at least 20% of the capital of the company paying dividend is held by the recipient; 20% in other cases | Both | 10% if interest is paid to a bank; 15% for others [Note 2] | Both | 15% | Both | 15% |
| Kuwait | Both | 10% | Both | 10% | Both | 10% | Both | 10% |
| Kyrgyz Republic | Both | 10% | Both | 10% | Both | 15% | Both | 15% |
| Libyan Arab Jamahiriya | Source | 20% | Source | 20% | Source | 30% |
No separate provision |
|
| Malaysia | Both | 10% | Both | 10% | Both | 10% | Both | 10% |
| Malta | Both | 10% if at least 25% of the shares of the company paying dividend is held by the recipient company; 15% in other cases | Both | 10% [Note 2] | Both | 15% | Both | 10% |
| Mangolia | Both | 15% | Both | 15% [Note 2] | Both | 15% | Both | 25% |
| Mauritius | Both | 5% if at least 10% of the capital of the company paying the dividend is held by the recipient; 15% in other cases | Both | 20% [Note 2]; Nil in some cases | Both | 15% |
No separate provision |
|
| Morocco | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Namibia | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Nepal | Both | 10% if at least 10% of the shares of the company paying the dividend is held by the recipient; 20% in other cases | Both | 10% if interest is paid to bank 15% for others [Note 2] | Both | 15% |
No separate provision |
|
| Netherlands | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| New Zealand | Both | 15% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Norway | Both | 15% if at least 25% of the capital of the company paying the dividend is held by the recipient; 20% in other cases | Both | 15% [Note 2] | Both | 10% | Both | 10% |
| Oman | Both | 10% if at least 10% of shares are held by the recipient; 12.5% in other cases | Both | 10% [Note 2] | Both | 15% | Both | 15% |
| Philippines | Both | 15% if at least 10% of the shares of the company paying the dividend is held by the recipient; 20% in other cases | Both | 10% if interest is received by a financial institution or insurance company; 15% in other cases | Both | 15% if it is payable in pursuance of any collaboration agreement approved by the Government of India | — | — |
| Poland | Both | 15% | Both | 15% [Note 2] | Both | 22.5% | Both | 22.5% |
| Portuguese Republic | Both | 10% | Both | 10% | Both | 10% | Both | 10% |
| Quatar | Both | 5%-10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Romania | Both | 15% if at least 25% of the shares of the company paying the dividend is held by the recipient; 20% in other cases | Both | 15% [Note 2] | Both | 22.5% | Both | 22.5% |
| Russian Federation | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Saudi Arabia | Both | 5% | Both | 10% | Both | 10% |
No separate provision |
|
| Serbia and Montenergro | Both | 5% (if recipient is company and holds 25% shares) otherwise 15% | Both | 10% | Both | 10% | Both | 10% |
| Singapore | Both | 10% if at least 25% of the shares of the company paying the dividend is held by the recipient; 15% in other cases | Both | 10% if loan is granted by a bank/similar institute including an insurance company; 15% for others | Both | 10% | Both | 10% |
| Slovenia | Both | 5-15% | Both | 10% | Both | 10% | Both | 10% |
| South Africa | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Spain | Both | 15% | Both | 15% [Note 2] | Both | [Note 4] | Both | [Note 4] |
| Sri Lanka | Both | 15% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Sudan | Both | 10% | Both | 10% | Both | 10% | ||
| Sweden | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Swiss | Both | 10% | Both | 10% [Note 5] | Both | 10% | Both | 10% |
| Syria | Residence | Nil | Both | 7.5% [Note 2] | Both | 10% |
No separate provision |
|
| Tanzania | Both | 10% if at least 10% of the shares of the company paying the dividend is held for a period of at least 6 months prior to the date of payment of the dividend; 15% in other cases | Both | 12.5% | Both | 20% |
No separate provision |
|
| Thailand | Both | 15% if dividend is paid by an industrial company and at least 10% of capital of such company is held by the reci-pient; 20% in other cases | Both | 10% for financial institutions and insurance company; 20% for others [Note 2] | Both | 15% |
No separate provision |
|
| Trinidad and Tobago | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Turkey | Both | 15% | Both | 10% if recipient is bank, etc.; 15% in other cases [Note 2] | Both | 15% | Both | 15% |
| Turkmenistan | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Uganda | Both | 10% | Both | 10% | Both | 10% | Both | 10% |
| Ukraine | Both | 10%-15% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| United Arab Emirates | Both | 5% if at least 10% of the capital of the company paying dividend is held by the recipient; 15% in other cases | Both | 5% if loan is granted by a bank/similar financial institute; 12.5% for others | Both | 10% |
No separate provision |
|
| United Arab Republic | Source | 10% | Source | 20% | Source | 30% |
No separate provision |
|
| United Kingdom | Both | 15% | Both | 10% if interest is paid to a bank; 15% for others [Note 2] | Both | [Note 3] | Both | [Note 3] |
| United States | Both | 15% if at least 10% of the voting stock of the company paying the dividend is held by the recipient; 20% in other cases | Both | 10% if loan is granted by a bank/similar institute including insurance company; 15% for others | Source | [Note 3] | Source | [Note 3] |
| Uzbekistan | Both | 15% | Both | 15% [Note 2] | Both | 15% | Both | 15% |
| Vietnam | Both | 10% | Both | 10% [Note 2] | Both | 10% | Both | 10% |
| Zambia | Both | 5% if at least 25% of the shares of the company paying the dividend is held for a period of at least 6 months prior to the date of payment of the dividend; 15% in other cases | Both | 10% [Note 2] | Both | 10% |
No separate provision |
|
1. 10 per cent of the gross amount of the interest on loans made or guaranteed by a bank or other financial institution carrying on bona fide banking or financing business or by an enterprise which holds directly or indirectly at least 10 per cent of the capital of the company paying the interest.
2. Dividend/interest earned by the Government and certain institutions like the Reserve Bank of India is exempt from taxation in the country of source.
3. Royalties and fees for technical services would be taxable in the country of source at the following rates :
a. 10 per cent in case of rental of equipment and services provided along with know-how and technical services ;
b. any other case—
i. during first five years of the agreement—
– 15 per cent if the payer is Government or specified organisation;
– 20 per cent in other cases;
ii. subsequent years, 15% in all cases.
Income of Government and certain institutions will be exempt from taxation in the country of source.
4. Royalties and fees for technical services would be taxable in the country of source at the following rates :
a. 10 per cent in case of royalties relating to the payments for the use of, or the right to use, industrial, commercial or scientific equipment;
b. 20 per cent in case of fees for technical services and other royalties.
5. 10 per cent of the gross amount of the interest on loans made or guaranteed by a bank or other financial institution carrying on bona fide banking or financing business or by an enterprise which holds directly or indirectly at least 20 per cent of the capital of the company paying the interest.
