Detailed Analysis of TDS on Non-Resident Payments
TDS on non-resident payment has always been a complex area of Income Tax Compliances. Detailed analysis is required to be performed to each transaction to understand TDS on foreign payment before you can initiate a payment. Wrong TDS on foreign party may put your company at greater risk in later years when the assessment is done. TDS on non-resident payments needs to be analyzed under section 195 of the Income Tax Act 1961. Under section 195 of the Income-Tax Act, when a person makes a payment by way of interest or any other sum other than salary to a foreign company or NRI, tax should be deducted at source at the rate applicable at force. To identify the TDS rate on payment to non-resident, one has to follow the below sequence: S.No Question to be asked Possible Response Expert opinion 1. Does the payment relate to Import of Goods or services? 1.Goods 2.Services 1. Goods: No TDS 2. Services: Refer below 2. Is there any specific section under which TDS on foreign payments...