Tds on payment to US organisation

[Dharmesh Soni]

Sir good morning there is a one query which require your assistance.

A doctor from Delhi who made payment to US organisation as membership fee( that US organization provides knowledge and latest updates for doctors) of 475 dollars equivalent to Rs. 39000 on which TDS not deducted. Whether TDS required to be deducted?

[TANAY GHILDIYAL]

Any person who makes any payment (other than salary or interest referred to in sections 194LB, 194LC, and 194LD) that is taxable in India to a non-resident must deduct tax under this section. 

The payer, one who pays the NRI or remits the payment, can be a resident or a non-resident, an individual, Hindu Undivided Families (HUFs), partnership firms, other NRIs, foreign companies, or an artificial juridical person (for example, a corporation, government agency or non-profit organization).

Is there a Threshold Limit to Deduct TDS u/s 195?

No, there is no threshold limit to deduct TDS under Section 195. However, the payer must deduct tax only when the payment made to a non-resident is taxable in India. Therefore, no tax is to be deducted in case of exempt income or any other income that is not taxable as per the Income Tax Act unless the government notifies explicitly.

What is the Rate of Tax Under Section 195?

TDS is deducted at either of the following rates, whichever is beneficial to the payee:

• Rates as per the Finance Act of the given year
• Rates contained in the Double Taxation Avoidance Agreement (DTAA) between India and the country of residence of such non-resident

Note:  The rates given under the Finance Act are to be increased by the applicable surcharge and education cess of 4%. However, surcharge and cess are not required to be added to the rates given under DTAA.

Tanay Ghildiyal

9873938771

AI Summary

TDS on payments to non-residents must be deducted if taxable in India, applying domestic or DTAA rates. Withholding tax must be deducted on payments to non-residents only when the payment is taxable in India; there is no threshold exemption. The payer is liable to deduct tax, except where other specified withholding provisions apply. Withholding is at the rate more beneficial to the payee: domestic statutory rates (with applicable surcharge and education cess) or the DTAA rate (without surcharge and cess). Exempt income or income not taxable in India is not subject to withholding unless the government notifies otherwise.