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Section 195 of the Income Tax Act about TDS on Non-Resident Indians

Who Is Responsible for Deducting Tax Under Section 195 of ITA?

How to Deduct TDS Under Section 195 of the Income Tax Act?

What Are the TDS Rates Under Section 195 of the Income Tax Act?

Take a look at the following table illustrating the TDS rates applicable to particular transactions:

Particulars Rates of Tax Deducted at Source
Income made by NRs from investment
[Source]
20%
Income earned by NRIs as long-term capital gains as specified under Section Section 115E
[Source]
10%
Income earned as long-term capital gains as specified under Section 112 (1)(c)(iii)
[Source]
10%
Income made by NRIs as short-term capital gains as specified under Section 111A
[Source]
15%
Other income earned as long-term capital gains, which is not specified under clauses 10(33), 10(36) and Section 112A
[Source]
20%
Interest payable by an Indian citizen or Government on borrowed money which is in foreign currency (this is not the income earned through interest as specified under Section 194LB or Section 194LC)
[Source]
20%
Income earned through royalty payable by an Indian individual or Government
[Source]
10%
Income earned through royalty (it is not the royalty referred to above) payable by an individual or Government
[Source]
10%
Income through fees for rendering technical services and payable by an Indian individual or Government
[Source]
10%
Other income
[Source]
30%

Thus, Section 195 of the Income Tax Act allows payers to deduct tax at source before making payments which removes the possibilities of tax evasion. It also makes it easier for non-residents to remain tax compliant as the responsibility of tax deduction is of payers.

FAQs about Section 195 of Income Tax Act