Section 195 requires withholding on payments to non-residents...

Section 195 requires withholding on payments to non-residents only where the remittance contains income chargeable in India. Where a DTAA is more beneficial, treaty definitions govern royalty and fees for technical services. Software payments are not royalty where the recipient receives only a restricted right to use a copyrighted product, rather than rights to reproduce, exploit, distribute or otherwise exercise copyright. Services must be separately tested under any treaty make-available requirement. Amounts falling outside royalty and FTS may constitute business profits, taxable only under applicable permanent-establishment and profit-attribution rules. Composite arrangements require component-wise classification, with proportionate withholding available for genuinely mixed remittances.