1. Deductor

Any person, paying Rent to Non-Resident shall be responsible for deduction of tax at source under Section 195.

2. Deductee

Tax shall be deducted if the recipient is a non-resident person and the sum received is chargeable to tax in India by virtue of Income-tax Act or Double Taxation Avoidance Agreements. Since the property is located in India, rental income from the property is taxable in India.

3. Rate of TDS

Rate of TDS under Section 195 are prescribed in Part II of First Schedule of Finance Act 2022. These rates shall be further increased by applicable Surcharge and Health & Education Cess.

TDS rate on payment of Rent 30% + 4% = 31.20%

4. Time of Deduction

The tax has to be deducted at the time of payment or at the time of credit of income, whichever is earlier. The tax shall be deducted even if amount is credited to ‘Suspense Account’

5. Deposit of Tax deducted at source

Tax deducted at source is required to be deposited to the credit of central government through Challan ITNS 281  within 7 days from the end of the month in which tax was deducted, however tax deducted during the month of March is required to be deposited by 30th April of the relevant assessment year.

6. Statement for tax deducted at source

The person responsible for deduction of tax at source is required to file a statement of tax deducted at source in Form 27Q on a quarterly basis by due dates specified under Rule 31A.

7. Certificate of TDS

The deductor shall issue certificate of tax deducted at source in Form 16A within 15 days from due date of furnishing of statement of tax deducted at source under Rule 31.

8. Rate of TDS where DTAA is in force

The CBDT has clarified that, in case remittance is made to a country with which a DTAA is in force, tax should be deducted at the rate provided in the Finance Act of the relevant year or at the rate provided in the DTAA, whichever is more beneficial to the assessee.

Section 195 read with

Nature of Income Rate of TDS (Payee is any other non-
resident)
Section 115E Income from foreign exchange assets payable to a non- resident Indian 20%
Section
115E
Long-term Capital Gains from transfer of specified assets by a non-resident Indian 10%
Section
115E
Long-term Capital Gains from transfer of other than specified assets by a non-resident Indian 20%
Section 112A Long-term Capital Gains exceeding Rs. 1,00,000 from transfer of equity shares, units of equity-oriented mutual fund or business trust on which Securities Transaction Tax (STT) is paid 10%
Section 112(1)(c) Long-term capital gain from transfer of unlisted shares or shares of a closely held company 10%
Section 112 Long-term Capital Gains from transfer of any other capital asset 20%
Section 111A Short-term Capital Gains from transfer of equity shares, units of equity-oriented mutual fund or business trust on which Securities Transaction Tax (STT) is paid 15%
Section 115A Interest income payable by Government or Indian concern on money borrowed or debt incurred in foreign currency (not being interest referred to in Section 194LB or Section 194LC) 20%
Section
115A
Royalty 10%
Section
115A
Fees for technical services 10%
Section 115A[1] Dividend 20%
Any Other Income 30%

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