TDS Rate Chart Section 195 — TDS on Payments to Non-Residents
Section 195 — TDS on Payments to Non-Residents
Income Tax Act 1961 — s.195 · ITA 2025 — s.393 + 395 + 397 + 400
Rate and threshold
| Condition | Rate |
|---|---|
| As per rates in force (Finance Act Part II) or DTAA, whichever is beneficial | Varies — plus surcharge & cess on Act rates |
- Threshold
- No threshold — applies from ₹1 if the sum is chargeable to tax in India
- Timing of deduction
- At credit or payment, whichever is earlier. Form 15CA (and CA certificate in 15CB where required) before remittance.
- Who deducts
- Any person (resident or non-resident) paying a non-resident a sum chargeable to tax in India
- Payee
- Non-resident (not being a company) or foreign company
What this section covers
Interest or any other sum chargeable under the Act (other than salary) — royalty, FTS, capital gains, etc.
Worked example
Indian company pays $10,000 software royalty to a US company (DTAA rate 15%)
Beneficial rate: DTAA 15% (no cess on treaty rate) vs Act rate 20% + surcharge + cess. Deduct 15% with TRC + Form 10F on file.
DTAA benefit requires the payee's Tax Residency Certificate and electronic Form 10F — without them, Act rates apply.
Under the Income Tax Act 2025
From 1 April 2026, s.195 of the 1961 Act maps to s.393 + 395 + 397 + 400 of the Income Tax Act 2025 (split mapping, per the official CBDT concordance). TDS in s.393; certificates in s.395; compliance/reporting in s.397 under the ITA 2025.
Full 1961 → 2025 mapping for s.195 →Frequently asked questions
Is there any threshold under s.195?
No monetary threshold. The only gate is chargeability — if no part of the sum is taxable in India, no TDS (but Form 15CA disclosure may still be needed).
Can I deduct on the taxable portion only?
Yes — via an order u/s 195(2) from the AO, or on the income component per settled principles (GE Technology, SC). Unilateral splits without support are risky.
Verify current Part II Finance Act 2026 rates-in-force for royalty/FTS (20% u/s 115A) before publishing any specific non-resident rate.