(For the year ending on March 31, 2022 – Ay 2022-23)
1. TDS on the Making Payments to a ‘Non’ Resident of India
(i) Responsibility of TDS under the section 195(1)
- TDS is to be deducted by a person as ‘responsible’ to pay any interest or ‘any other sum’ to a non-resident of India.
(ii) Definition of a Non-Resident
- ‘Definition’ of a non-resident is to includes an individual and also ‘any’ kind of entity as located or incorporated ‘outside’ India
(iii) TDS on Salaries under the section 192 or 195
- TDS is to be deducted on payment to a non-resident for ‘salaries’ under the Section 192 ‘not’ under the Section 195 of Income Tax Act, 1961.
(iv) TDS on Credit or Payment
- TDS is to be deducted at time of ‘credit’ to account of payee or at time of payment whichever is earlier.
(v) Rate of TDS in DTAA
- Rate of TDS is to be applied as applicable under the Income Tax Act, 1961 or as applicable in ‘DTAA’ whichever is ‘lower’
(vi) Deemed Credit of Interest or any Other Sum
(a) ‘Deemed’ credit is to include the following heads :-
(aa) Interest payable account
(ab) Suspense account
(ac) Any ‘other’ name
(b) Henceforth TDS is to be deducted beside that same is ‘not’ directly credited to account of a non-resident payee
(vii) Proportionate TDS with Permission of Assessing Officer (AO) under the section 195(2)
(a) ‘Payer’ is permitted to apply before AO where he is observing that 100% payments not ‘chargeable to tax’ in India
(b) Hence payer is permitted to obtain a general or special permission for ‘proportionate’ TDS from the AO
(viii) O% TDS with a Permission of AO under the section 195(3)
(a) ‘Payee’ is permitted to apply before AO under the section 197 for granting a certificate to remit the interest or any other sum ‘with 0%’ TDS
(b) Hence payer is permitted ‘not’ to deduct 0% TDS till certificate is in force
(ix) Validity of Certificate under the section 195(4)
- ‘Certificate’ will remain in force ‘till’ date as specified in it or till date of cancellation where certificate is cancelled by AO ‘before’ expiry of it.
(x) Important Clarification’s
(i) Section 195 is covering ‘all’ payments except those covered under the head ‘salaries’ under the Section 192
(ii) Minimum threshold limit is ‘not’ prescribed under the Section However minimum thresh hold limit is prescribed under the Section 192
(iii) Payer is permitted to submit an application before Board for Advance Ruling (BAR) for obtaining an opinion against applicability of under the section 195
(iv) Section 195 is to be read along with other sections i.e. 4, 5 and 9 of income tax Act, 1961
2. Remittance for the Payments to a ‘Non’ Resident of India
(i) Form No.15 CB is required from a Practicing Chartered Accountant
(a) ‘Payer’ is required to furnish certain information’s for a remittance/payment to a non-resident in form No. 15CA through electronic mode
(b) Form No. 15CA is be submitted ‘after’ obtaining certificate from a practicing Chartered Accountant in India in Form No.15CB in accordance to the Rule 37BB
(ii) Form No.15CB is ‘not’ required
- Form No 15CB is ‘not’ required where payer is remitting for a
(a) ‘Diplomatic’ mission as operating in India.
(b) ‘Generally’ permitted for ‘medical expenses’ etc. under the Liberalized Remittance Scheme (LRS)
(c) ‘Specifically’ permitted for ‘import of goods’ etc.
3. Incomes Deemed to Accrues or Arises by a ‘non’ resident of India
(i) Incomes Deemed to Accrues or Arises in India under the Section 9
(a) TDS is to be deducted on ‘all’ incomes actually earned or ‘deemed’ earned by a non-resident in India
(aa) Incomes actually or ‘deemed’ earned through a ‘business connection’ in India
(ab) Incomes from a property as ‘located’ in India
(ac) Incomes from a other asset as ‘existed’ in India
(ad) Incomes from another source as ‘existed’ in India
(ae) Incomes from another property as ‘located’ in India
(b) TDS is to be deducted by the ‘Govt’. of India on incomes under the head ‘salaries’ to a citizen of India for the services as provided ‘outside’ India under the Section 192 ‘not’ 195
(c) TDS is to be deducted on incomes under the following heads applying at prevailing rates in Income Tax Act, 1961 or in DTAA whichever is ‘lower’.
(ca) Interest
(cb) Royalty
(cc) Fees for technical services (FTS)
| 4. Rates of TDS on the Payments to a ‘Non’ Resident Individual of India | |||||
| S.
No |
Section | Nature of the ‘Payments’ | Aggregate payments not exceeding Rs 50 Lacs in % | Aggregate payments as exceeding Rs 50 Lacs in % | Aggregate payments as exceeding Rs 1/2/5 crore in % |
| (i) | 192 | Payments under head Salaries (thrash hold limit is 2.5Lac) | Based on Regular Slab Rates
|
||
| (ii) | 192A | Payments for premature withdrawals from EPF | 10.4 | 11.44 | 11.96/13/14.248 |
| (iii) | 194 B | Payments for winnings from lottery /crossword | 31.2 | 34.32 | 35.88/39/42.744 |
| (iv) | 194BB | Payments for winnings from horse races | 31.2 | 34.32 | 35.88/39/42.744 |
| (v) | 194E | Payments to Non Resident sport Man or Association |
20.8 |
22.88 |
23.92/26/28.496 |
| (vi) | 194EE | Payments for NSS | 10.4 | 11.44 | 11.96/13/14.248 |
| (vii) | 194F | Payments for Re-purchase of units by Mutual Fund |
20.8 |
22.88 |
23.92/26/28.496 |
| (viii) | 194G | Payments for Commission and brokerage on sale of Lottery Tickets | 5.2 | 5.72 | 5.98/6.5/7.124 |
| (ix) | 194LB | Payments for Interest on Infrastructure Debt Fund |
5.2 |
5.72 | 5.98/6.5/7.124 |
| (x) | 194LBA(2) | Payments by Business Trust (Section 10(23FC)) |
5.2 |
5.72 |
5.98/6.5/7.124 |
| (xi) | 194LBA(3) | Payments by Business Trust (Section 10(23FCA) |
31.2 |
34.32 |
35.88/39/42.744 |
| (xii) | 194LBB | Payments for Income from units of Investment fund (Section 115UB) | 31.2 | 34.32 | 35.88/39/42.744 |
| (xiii) | 194LBC(2) | Payments for Income from Securitization Trust (Section 115TCA) |
31.2 |
34.32 |
35.88/39/42.744 |
| (xiv) | 194LC | Payments for Interest on Foreign Currency loans and Bonds |
5.2 |
5.72 |
5.98/6.5/7.124 |
| (xv) | 194LD | Payments for Interest on Rupee Bonds to FII | 5.2 | 5.72 | 5.98/6.5/7.124 |
| (xvi) | 195 | Payments to Non Resident and Non
Domestic Company |
10.4 to 31.2 |
11.44 to 34.32 |
11.96 to 35.88/ 13 to 39/14.248 to 42.744 |
| (xvii) | 196B | Payments for Income on Unit Held by Offshore Fund | 10.4 |
11.44 |
11.96/13/14.248 |
| (xviii) | 196C | Payments for Interest on Foreign Currency Bond |
10.4 |
11.44 |
11.96/13/14.248 |
| (xix) | 196D | Payments for Income to FII from Securities | 20.8 | 22.88 | 23.92/26/28.496 |
5. Important Clarifications on the Payments to a ‘non’ resident of India
(i) (a) TDS is to be deducted on ‘all’ payments made under head Interest, Royalty and FTS as paid by the ‘Govt.’ of India or by a ‘any’ resident of India
(b) However ‘no’ TDS is to be deducted where paid by the Govt. of India or a resident of India for utilizing the following things as existed ‘outside’ India and also these are ‘not’ chargeable to tax in India
(ba)Funds as ‘formed’ Outside India
(bb) Properties as ‘located’ Outside India
(bc) Intellectual Rights as ‘existed’ Outside India
(bd) Information’s as ‘available’ Outside India
(be) Services as ‘utilized’ for any business, profession or earning incomes outside India.
(ii) TDS is to be deducted on incomes earned by a non-resident against a business or profession as carried for earning of an income ‘in’ India
(iii)(a) Term ‘royalty’ is defined under explanation 2 of clause (vi) and (vii) of Section 9(1) of Incomes Tax Act, 1961
(c) However term royalty as defined under the respective DTAA will be ‘override’
(iv) TDS on ‘Salaries’ payments to a resident and non- resident ‘both’ are to be deducted along with Education cesses + Surcharge
(v) TDS Provisions of section 206AA are also applicable to a non-resident where valid Pan is ‘not’ provided by the pay Hence TDS @ 20% or applicable rate of TDS whichever ‘higher’ is required from a non-resident also.
(vi) TDS is ‘not’ required on interest payments on NRE and FCNR accounts.
(vii) TDS Provisions of section 206AA are ‘not’ applicable to a non-resident where following ‘all’ information’s are provided by the non-resident
(a) Name
(b) E-mail id
(c) Address in the foreign country
(d) Tax Residency certificate (TRC) from foreign Govt
(e) Tax Identification Number (TIN) in foreign country ‘like’ PAN in India
(viii) TDS + Education Cess + Surcharge are to be deducted on the payments to a non-resident payee
(ix) TDS @30% + Surcharge + Education cess are to be deducted on payments to a non-resident on ‘Non’-Resident Ordinary Account (NRO)
| 6. Rates of TDS on the ‘payments’ to a Resident Individual and any other entity | ||||||
|
S.No |
Section |
Nature of the ‘Payments’ |
Aggregate Threshold
Limit (Rs.) |
Rates (%) | No
Invalid PAN |
|
| Individual/ HUF | Others | |||||
| (i) | 192 | Payments under head Salaries | 2,50,000 | Normal Slab Rates | N/A | 20% or
Normal Slab Whichever is higher |
| (ii) | 192A | Payments for Premature withdrawal from EPF | 50,000 | 10 | N/A | MMR |
| (iii) | 193 | Payments for Interest on Securities | 10,000 | 10 | 10 | 20 |
| (iv) | 194 | Payments for Dividends | 5,000 | 10 | 10 | 20 |
| (v) | 194A | Payments for Interest from Banks etc. | 40,000/
50,000 |
10 | 10 | 20 |
| (vi) | 194A | Payments for Interest from Others | 5,000 | 10 | 10 | 20 |
| (vii) | 194B | Payments for Winning from Lotteries | 10,000 | 30 | 30 | 30 |
| (viii) | 194BB | Payments for Winning from Horse Race | 10,000 | 30 | 30 | 30 |
| (ix) | 194C | Payments for ‘Single’ Transaction to Contractor | 30,000 | 1 | 2 | 20 |
| (x) | 194C | Payments for ‘Multiple’ Transactions to Contractor
(including Transporter with more than 10 carriages) |
1,00,000 | 1 | 2 | 20 |
| (xi) | 194D | Payments for Insurance Commission | 15,000 | 5 | 10 | 20 |
| (xii) | 194DA | Payments for Life Insurance Policy | 1,00,000 | 5 | 5 | 20 |
| (xiii) | 194EE | Payments for NSS | 2,500 | 10 | 10 | 20 |
| (xiv) | 194F | Payments for Repurchase of Units by Mutual Funds | — | 20 | 20 | 20 |
| (xv) | 194G | Payments for Lottery Commission | 15,000 | 5 | 5 | 20 |
| (xvi) | 194H | Payments for Other Commission / Brokerage | 15,000 | 5 | 5 | 20 |
| (xvii) | 194I | Payments for Rent of Land and Building | 2,40,000 | 10 | 10 | 20 |
| (xviii) | 194I | Payments for Rent of Plant / Machinery / Equipment | 2,40,000 | 2 | 2 | 20 |
| (xix) | 194IA | Payments for Transfer of immovable property other than agriculture land | 50,00,000 | 1 | 1 | 20 |
| (xx) | 194IB | Payments for Rent paid by Individual / HUF
(without tax audit) |
50,000 PM | 5 | N/A | 20 |
| (xxi) | 194IC | Payment for monetary consideration under Joint Development Agreements
|
— | 10 | 10 | 20 |
| (xxii) | 194J | Professional Fees / Technical Fees / etc. | 30,000 | 10 | 10 | 20 |
| (xxiii) | 194J | Payments to Call Centre Operator | 30,000 | 2 | 2 | 20 |
| (xxiv) | 194K | Payment for Income against units | — | 10 | 10 | 20 |
| (xxv) | 194LA | Payments for Compensation on transfer of immovable property other than agricultural land | 2,50,000 | 10 | 10 | 20 |
| (xxvi) | 194LBA(1) | Payments for Income on units of Business Trust | — | 10 | 10 | 20 |
| (xxvii) | 194LBB | Payments for Income on units other than Business Trust | — | 10 | 10 | 20 |
| (xxviii) | 194LBC(1) | Payments for Income on Investment in Securition Trust | — | 25 | 30 | 25/30 |
| (xxix) | 194M | Payments ‘by’ individual / HUF to professional etc. | 50,00,000 | 5 | 5 | 20 |
| (xxx) | 194N | Payments for Withdrawal of cash from banks etc. | 1 crore | 2 | 2 | 20 |
| (xxxi) | 194-O | Payments ‘by’ E Commerce operator to seller of goods and services | 5,00,000 | 1 | 1 | 20 |
| (xxxii) | 194-P | Deduction against pension income and bank interest by specified bank for senior citizen (age of 75 or more) | — | Normal slab rate | N/A | 20% or
Normal Slab Whichever is higher |
| (xxxiii) | 194-Q | Payments for purchase of goods (Applicable from July 01, 2021) | 50,00,000 | 0.1 | 0.1 | 5 |
7. Important Clarification’s on the payments to a resident of India
(i) TDS on the ‘Salaries’ are required to be deducted based on the slab along with education cess + Surcharge (if applicable)
(ii) TDS is be deposited up to 7th of following month ‘except’ April 30 for March month only.
(iii) TDS Quarterly returns are to be submitted for payments to resident and non-resident ‘both’ up to 31st of following quarter ‘except’ may 31st for March quarter only.
(iv) (a) TDS @ 20% or tax rate as applicable whichever ‘higher’ is to be deducted on the payments were valid PAN is ‘not’ provided by the deductee.
(b) TDS under the Section 194C is be deducted on the value of invoice ‘excluding’ value of material if any supplied by customer to the work contractor where Value is ‘separately’ mentioned in the invoice
(v) TDS @ 0% is permitted on interest payment up to 50 thousand by a bank, co-operative society and post office as primarily engaged in banking business to a ‘senior citizen’ having minimum age of 60 years. Hence TDS @ 0% is permitted on interest payment up to Rs.40 thousand to a ‘non’ senior citizen
(vi) TDS @ 0% is to be deducted on amount of ‘income’ included in payment against ‘life’ insurance policy
(vii) Surcharges and education cesses are ‘not’ to be deducted in rate of TDS for a ‘resident of India’ ‘except’ under the head salaries
(viii) TDS on Dividend to Business Trust
> [AY 2020-21/YE – March 31, 2020 – ‘New’ insertion section 194]
-
- TDS is ‘not’ to be deducted by a special purpose vehicle (SPV) on payment of ‘dividend’ to a business trust
(ix) TDS on Pension and Interest Income of Senior Citizen
> [AY 2021-22 / YE March 31, 2021 – section 194 P]
-
- Now bank is required to deduct ‘actual’ tax liability as TDS where ‘senior citizen’ is having his bank account and age is also exceeding 75 years.
(x) TDS on purchases of the goods
> [Applicable w.e.f. July 01, 2021 – ‘new’ section 194Q]
(a) Now TDS @ 0.1% is to be deducted by the ‘purchaser’ against payments of goods where turnover of purchaser is exceeding 10 crore in immediate ‘preceding’ financial year and also aggregate of purchases from the seller is exceeding 50 Lac in the ‘current’ financial year
(b) Now TDS @ 5% is to be deducted by the purchaser against payment of goods where seller has ‘not’ provided his valid PAN
(ix) 200% TDS/ TCS against the deductee as ‘non-filers’ of IT Return
> [Applicable w.e.f. July 01, 2021 – ‘new’ section 206AB and 206CCA]
-
- Now TDS and TCS are to be deducted twice (@200%) of the normal rate of TDS or TCS as specified in the relevant section of the act or @ 5% whichever is higher where deductee is ‘not’ filing his income tax returns for last 2 assessment years and also time limit for filing such tax returns under the section 139(1) is already expired for ‘both’ the assessment years
| 8 | Rates of TCS on the Collection of Payments for Sales | ||||
| FY – 31.03.2022
AY – 2022-2023 |
|||||
| S.No | Section | Nature of the ‘Receipts’ | Threshold Limit Rs. | Rates (%) | No Valid PAN |
| (i) | 206C | Receipts for sale of Scrap | NIL | 1.00 | 5 |
| (ii) | Receipts for sale of Tendu Leaves | NIL | 5.00 | 10 | |
| (iii) | Receipts for sale of Timber obtained under a forest lease or other mode | NIL | 2.50 | 5 | |
| (iv) | Receipts for sale of Any other forest produce not being a timber or Tendu leave | NIL | 2.50 | 5 | |
| (v) | Receipts for sale of Alcoholic Liquor for human consumption | NIL | 1.00 | 5 | |
| (vi) | Receipts for sale of Parking Lot, Toll Plaza, Mining and Quarrying | NIL | 2.00 | 5 | |
| (vii) | Receipts for sale of Minerals, being coal or lignite or iron ore | NIL | 1.00 | 5 | |
| (viii) | Receipts for Sale of motor vehicle | 10 Lac | 1.00 | 5 | |
| (ix) | Receipts for Remittance under the Liberalized Remittance Scheme (LRS) | 7 Lac | 5.00 | 10 | |
| (x) | Receipts for Sale of overseas tour | NIL | 5.00 | 10 | |
| (xi) | Receipts for Sale of good | 50 Lac | 0.10 | 1 | |
| 9 | Important Clarification’s on the ‘Receipts’ of Payments for Sale | ||||
Lac Moreover TCS is applicable on the amount ‘exceeding’ by 7 Lacs |
|||||
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Disclaimer : The contents of this presentation are solely for informational purpose. Neither this presentation nor the information contained herein constitutes a contract or will form the basis of a contract. The material contained in this presentation does not constitute/substitute professional advice that may be required before acting on any matter. While every care has been taken in the preparation of this presentation to ensure its accuracy at the time of publication, Satish Agarwal assumes no responsibility for any errors which despite all precautions, may be found herein. In no event shall we be liable for direct or indirect or consequential damages, if any, arising out of or in any way connected with the use of this presentation or the information contained herein.
(Author can be reached at email address satishagarwal307@yahoo.com or on Mobile No. 9811081957)
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