TDS on Payment to Non-Residents and Foreign Company

Any person responsible for paying to a non-resident, no being a company, or to a foreign company, any interest or any sum other than salary shall deduct TDS as per the provision or procedure given below. You have to read the complete article to know the procedure to deduct TDS on payment to Non-residents and Foreign company.

Person Responsible to deduct Tax: The payer and if the payer is a company, including the principal officer thereof, or the authorised dealer, as the case may be.

Exemption Limit: Nil.

Time of deduction of TDS: Tax shall be deducted either at the time of actual payment to Non-Residents and Foreign Company of such income or at the time of tis credit to the account of the payee whichever is earlier.

Where interest/income is credited to any account, whether called interest account, suspense account or by any other name in the books of accounts of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee.

Amendment made by the Finance (No. 2) Act, 2014: Time period for deposit of tax deducted at source in case of payment to non-resident till due date return u/s 139(1) [SECTION 40 (a) (i)]

Time limit for deposit of TDS:

Where tax is deducted by the office of the Government:

a)    On the same day where the tax is paid without production  of an income-tax challan; and

b)    On or before seven days from the end of the month in which the deduction is made, where tax is paid accompanied by an income-tax challan.

In any other case,

a)    On or before 30^th day of April where the income or amount is credited or paid in the month of March; and

b)    In any other case, on or before seven days from the end of the month in which the deduction is made.

Time limit for issue of certificate of TDS and Form: When TDS is deducted on the payment to Non-residents and Foreign Company, the deductor should issue form 16A within 15 days from the due date for submitting TDS return/statement. The form 16A should be issued quarterly on 30th July, 30th Oct, 30th Jan & 30th May. However, in case of a deductor being office of the Government, certificate shall be issued quarterly on or before 15^th August, 15^th November, 15^thFebruary and 30^th May.

TDS Return/Statement: The form No.27Q should be submitted in case of payment to non-residents and foreign company at TIN Center quarterly on or before 15^th July, 15^th October, 15^th January for first 3 quarters and 15^th May for the last quarter. However, in case of a deductor, being office of the Government the due date shall be on or before 31^st July, 31^st October, and 31^st January for the first three quarters and on or before 15^th May for the last quarter.

Annual tax statement under section 203AA: In Form No. 26AS to be prepared and delivered by the Principal Director General or Director General of Income Tax (Systems) or a person authorized by him to the deductee by 31^st July following the financial year during which taxes were deducted or paid.