⌖ Utility / Direct Tax
TDS Rates for N.R.I u/s 195.
Withholding on payments to non-residents — Section 195 read with Part II of First Schedule.
As of
Finance Act, 2024 — applicable from 1 April 2025
⌖ Context
Section 195 of the Income Tax Act, 1961 governs withholding on any sum (other than salary) chargeable to tax in India when paid to a non-resident or foreign company. Rates below are the Act rates — the applicable DTAA rate, if more beneficial, overrides them on furnishing of TRC, Form 10F and the requisite declarations. Health & education cess at 4% and surcharge (per slab) apply.
Income chargeable in the hands of non-residents
| Nature of Payment | Rate (Act) | Reference |
|---|---|---|
| Long-term capital gains on listed securities (with STT) > 1.25L | 12.5% | 112A |
| Long-term capital gains — other listed/unlisted securities | 12.5% | 112(1)(c) |
| Short-term capital gains on listed securities (with STT) | 20% | 111A |
| Short-term capital gains — other | Rates in force | Slab/30% |
| Income by way of long-term capital gains (FII/FPI) | 12.5% | 115AD |
| Royalty (agreement after 31.03.1976) | 20% | 115A(1)(b) |
| Fees for technical services (FTS) | 20% | 115A(1)(b) |
| Interest from Govt or Indian concern on foreign currency loan | 20% | 115A |
| Interest on infrastructure debt fund | 5% | 194LB |
| Interest from Indian company on ECB / RDB | 5% | 194LC |
| Interest to FII/QFI on Govt/Rupee corporate bond | 5% | 194LD |
| Dividend (other than 115-O / 115BBDA) | 20% | 115A |
| Income from units of UTI/MF purchased in forex | 20% | 115A(1)(a)(iii) |
| Income from GDR purchased in forex (resident employees) | 10% | 115ACA |
| Income of FII from securities (other than dividend / LTCG) | 20% | 115AD |
| Winnings from lottery, crossword, races | 30% | 115BB |
| Income from VDA transfer | 30% | 115BBH |
| Other income chargeable in India | Rates in force | — |
Surcharge: 10% (income 50L–1Cr), 15% (1Cr–2Cr), 25% (2Cr–5Cr), 37% (above 5Cr). Surcharge on dividend / capital gains under 111A, 112, 112A and on FII income under 115AD is capped at 15%.
DTAA override and procedural checklist
Section 90(2) — the payee may opt for the DTAA rate if more beneficial than the Act rate, provided a Tax Residency Certificate (TRC) from the home jurisdiction and Form 10F are furnished. A self-declaration on PE/beneficial ownership is required for most treaty positions.
Form 15CA + 15CB is mandatory for remittances chargeable to tax (with limited exemptions under Rule 37BB). The CA-certified 15CB precedes the 15CA Part C.
Section 206AA does NOT apply where DTAA rate is invoked subject to the non-resident furnishing tax identification number, address and TRC (per Rule 37BC).
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