There are various sections under which tax is required to be withheld as per provisions of those sections, which are as follows:

 

1. Section 194E – Payment to Non-Resident Sportsmen or Sports Association

 

2. Section 194LC – Income by way of interest from Indian Company

 

3. Section 194LD – Income by way of interest on certain bonds and Government securities

 

4. Section 196B – Income from units

 

5. Section 196C – Income from foreign currency bonds or shares of Indian company

 

6. Section 196D – Income of Foreign Institutional Investors from securities

 

If the income is not falling under any of the above sections or not meeting the criteria or conditions specified in any of the specific section as mentioned above, then in such case tax will be required to be withheld as per the Provisions of Section 195 – Other Sums.

 

1.  What is TDS under Section 195?

 

While making the payment or remittance to the person who is non-resident whether under the Income-tax Act, 1961 tax is required to be withheld u/s 195

 

2.  Who is the payer u/s 195?

 

Payer is the person who pays or remits the money to the non-resident. The payer can be any person viz.

 

1. An Individual

 

2. HUF

 

3. Firm or LLP

 

4. Company

 

5. AOP / BOI

 

6. Any other person

 

3.  When TDS is required to be deducted u/s 195?

 

TDS u/s 195 is required to be deducted at:

 

1. The of crediting the vendor or payee, or

 

2. The time of payment

 

4.  Is there any threshold defined under the Act for the deduction of TDS u/s 195?

 

No, there is no threshold prescribed under the Act for applicability of TDS u/s 195. If the sum or payment is chargeable to tax, then in such case tax is required to be withheld on such sum.

 

5.  What is rate of TDS under section 195?

 

The rate of TDS is not prescribed u/s 195, however the TDS is to be deducted as per rate prescribed under Part II of First Schedule of Finance Act. Also, such TDS rate is further subject to cess and surcharge as per applicable rate in force.

 

 

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