Home > TDS > TDS On Payments to NRIs Last Updated: Jan 11th 2024
TDS On Payments to Non-Resident Indians (NRIs)
TDS on payments to Non-Residents are always a complex subject. Income Tax rules for residents and Non-Residents (NRIs) differ in certain ways. This document covers TDS on Payments to NRI (Section 195), TDS Payments to Government and TDS Returns, Lower Deduction / NIL Deduction of TDS.
This document covers
- TDS on Payments to NRI (Section 195)
- TDS Payments to Government and TDS Returns
- Lower Deduction / NIL Deduction of TDS
- Next Steps
1. TDs on Payments to NRI (Section 195)
Section 195 of Income Tax Act, 1961 deals with deduction of TDS on payments to NRI.
In a simple taxpayer language .. Filing Form 27Q is needed by the Buyer or tenant for payments to NRIs in the area of House Rents, Purchase of a Property, any other payments (other than the Salary)
1.1. Applicability: Any person (Resident or Non-Resident of India) who is liable to pay any sum to Non-Resident Indians (NRI) are required to deduct TDS u/s 195 and file the related TDS returns. In Short
- Payer: Resident or Non-Resident Indian)
- Payee: Non-Resident Indian (Individuals) or Foreign Companies
1.2. Nature of Payments: All payments payable to NRI’s except Salaries (TDS to be deducted u/s 192), interest payable u/s 194LB, 194LC and 194LD
1.3. Time of Deduction: The TDS needs to be deducted on the following times which ever is earlier
- Credit of amount to the account of payee (or)
- Payment of amount to payee either in cash or bank
1.4. Threshold Limit: There is no Threshold limit for the TDS deduction on payments to NRI u/s 195. If the income of NRI’s is liable for taxes in India, then the payer needs to deduct TDS u/s 195.
1.5. TDS Rates : The following are the TDS rates on different types of payments to Non-resident Indians (NRIs)
| # | Nature of Payment | Rate of TDS |
|---|---|---|
| 1 | Dividend | 20% |
| 2 | Short Term Capital Gains u/s 111A | 15% |
| 3 | Short Term Capital Gains other than 111A | 30% |
| 4 | Long Term Capital Gains u/s 112A exceeding Rs 1 Lakh | 10% |
| 5 | Long Term Capital Gains on Securities other than 112A | 10% |
| 6 | Long Term Capital Gains on Sale of property (TDS needs to be deducted on Sale Value) (* refer section 2.2 below) | 20% |
| 7 | Other Income | @ normal Slab Rates of Tax |
| 8 | House Property Rent | 30% |
The above TDS rates are only Tax rates. Corresponding Education cess @ 4% and Surcharge @ 10%/15%/25% depending on the income should be deducted along with above tax rates
More on Form 27Q & Services
1.6. TDS rates on Long Term Capital Gains for NRIs?
In case of NRIs selling a property / apartment / flat / house / commercial land etc. with long term capital gains, attracts appropriate TDS rates based on the sale value. Such TDS need to be deducted by the buyer of such asset and release the rest of the payment.
| Particulars | Sale Value | ||||
|---|---|---|---|---|---|
| <50 Lakhs | 50 Lakhs - 1 Crore | More than 1 - 2 Crores | 2 - 5 Crores | Above 5 Crores | |
| Long Term Capital Gain Tax | 20% | 20% | 20% | 20% | 20% |
| Surcharge | Nil | 10% of Above | 15% of Above | 25% of Above | 37% of Above |
| Total Tax (include Surcharge) | 20% | 22% | 23% | 25% | 27.4% |
| Health & Ed.Cess | 4% of Above | 4% of Above | 4% of Above | 4% of Above | 4% of Above |
| Applicable TDS Rates (include Surcharge & Cess) | 20.8% | 22.88% | 23.92% | 26% | 28.496% |
2. TDS Payments to Government and TDS Returns
2.1. TDS Payment
The TDS deducted on payments to Non-Resident Indians (NRI) should be paid to the Government within 7 days from the end of the month in which the tax is deducted. TAN is mandatory for deduction of TDS u/s 195
For Example, If TDS is deducted on 14/05/2021, the TDS needs to paid on or before 07/06/2021
2.2. TDS Returns
The TDS returns for the payments to NRI should be filed in the Form 27Q ( ReferForm 27Q (Payments to NRI) TDS Return Service Plan & Pricing to have our expert filing TDS ) . It needs to be filed quarterly and the due dates are as follows
- April to June – July 31
- July to Sep – Oct 31
- Oct to Dec – Jan 31
- Jan to March – May 31
NOTE: Form 26QB and Form 26QC cannot be filed if the payee is Non-Resident
Tax Calendar
2.3. Form 16A
Form 16A is the TDS certificate to be issued by the deductor to the deductee in respect of the tax deducted and deposited as TDS u/s 195. Form 16A should be given by the Deductor to Deductee within 15 days from the date of filing.
3. Lower Deduction / NIL Deduction of TDS
- Any person (Non-Resident Indian) who is receiving any amount on which TDS is to deducted u/s 195 shall make an application to assessing officer for Non deduction of TDS or lower rate of deduction of TDS. The application should be made in the Form 13. Know more on How to submit Form 13
- If the certificate for Lower rate of deduction /nil rate of TDS deduction is granted, then the payer should deduct the TDS as per certificate.
- The certificate granted will remain in force for the period specified in the certificate.
- Call or Chat now to get the expert services from EZTax to apply Form 13 per your requirement.
4. Next Steps
Contact Team EZTax.in to prepare TDS and file your Taxes either through Expert Services or through Online Software @ EZTDS.in
Additional Resources
- Refer COVID-19 : Tax Compliance Help Center for latest updates
- Also refer to NRI Income Tax Help Center for a comprehensive set of resources related to NRIs on Taxation in India.