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Obtain
certificate in Form No. 15CB from a Chartered Accountant
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Obtain
PAN for the Non-Resident else 20% rate u/s 206AA.
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Tax
calculated should be increased by surcharges except where treaty rates are
applied.
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Tax has
to be grossed up u/s 195A for all agreements entered after 2.6.2002 where tax
is agreed to be borne by the payer.
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Tax has
to be deducted only if it is required to be deducted on sums chargeable to tax
in India under the Income-tax Act. Circular No. 786 dated 7th February, 2000.
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TDS on
salary to non-residents (including Indian NR) is governed by sec. 192 and not
195.
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Non-residents making payments to non-residents are liable to TDS if the
payments are chargeable to tax in India (228 ITR 487-AAR).
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Exchange rate on the day on which TDS is required to be deducted has to be
considered.
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Payer
can make a reference by simple letter on letter head/plain paper to Assessing
Officer u/s. 195(2) of the Act (under Rule 10) if he opines that only portion
of payment is going to be taxed and hence a request is made for determination
of the amount on which tax has to be deducted.
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An
application u/s 195(3) can be made by the payee to the AO for no deduction of
tax for receipt of sums other than dividends or interest. (Form 15D).
Certificate is valid for the financial year specified therein unless cancelled
by AO anytime before the expiry of the financial year.
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An
application u/s 197 can be made by the payee to the AO for no deduction of tax
or at a lower rate of tax than rate prescribed to be deducted. (Form 13).
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Certificates u/s 195(3) and u/s 197 are not appealable.
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U/s 195
a non-resident is not entitled to basic/threshold exemption in respect of LTCG.
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Tax has
to be deducted at rates prescribed under relevant Finance Act or at the rates
prescribed/specified in treaty, whichever are beneficial to the assessee.
Treaty is an option to the assessee.
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In case
treaty rates are opted by the remittee/payee/recipient, take residency
certificate of payee/receiver to determine DTAA of which country has to be
applied.
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Furnish
the information in Form 15CA, verified in the manner prescribed. Rule 37BB.
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Form
No. 15CA to be then electronically uploaded on designated website
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Take
printout of Form No. 15CA, sign and manually file with bankers/authorized
dealers of the payee along with copy of Form 15CB. Approach Bank and ask them
for remittance with cheque/account debit.
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Refund
of TDS u/s 195 in certain circumstances – Circulars 790/20.4.2000 &
7/23.10.2007.
