Royalty and FTS payment by NTRO to a non-resident to be tax-exempt

Section 195 requires a person to deduct tax at the time of payment or credit to a non-resident.

Given the business exigencies of the National Technical Research Organisation (NTRO), it is proposed to amend section 10 so as to provide that the income arising to non-resident, not being a company, or a foreign company, by way of royalty from, or fees for technical services rendered in or outside India to, the NTRO will be exempt from income tax.

Consequently, NTRO will not be required to deduct tax at source on such payments.

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent assessment years.

[Clause 5]

Tax exemption for royalty and fees for technical services removes withholding obligation on payments made by NTRO. Income to non-resident persons (other than companies) by way of royalty or fees for technical services from or to NTRO is proposed to be tax-exempt, removing NTRO's obligation to withhold tax at source on such payments and altering the withholding and assessment treatment for those receipts.