TDS on Foreign Services

TDS on payments to a foreign service provider depends on classification (FTS vs. business income vs. royalty) — there is no flat rate and no minimum threshold.

TDS on Import of Software

Following the Supreme Court's Engineering Analysis (2021) ruling, TDS on standard software licence payments is often NIL — but classification matters, and many deductors still over-deduct.

TDS on Foreign SaaS Subscriptions

TDS on SaaS subscriptions like AWS, Zoom, Adobe or Google Workspace usually turns on whether the payment is for accessing a service (often not royalty) or effectively licensing underlying technology.

TDS on Payment to a Foreign Company

Payments to a foreign company are taxed similarly to payments to non-resident individuals under Section 393(2), but with generally higher 'other income' rates and different surcharge slabs.

TDS on Foreign Consultancy Fees

Most foreign consultancy fees qualify as Fees for Technical Services (FTS) at 20% domestic rate, but pure advisory-without-technical-content payments can fall outside FTS entirely.

TDS on Royalty to a Foreign Company

Royalty paid to a foreign company attracts 20% domestic TDS under Section 393(2), doubled from 10% by Finance Act 2023 — subject to a lower rate under a valid DTAA.

TDS on Fees for Technical Services Paid to an NRI

FTS paid to an individual NRI attracts the same 20% domestic Section 393(2) rate as payments to a foreign company, with individual (not corporate) surcharge slabs applying on top.

TDS on Professional Fees Paid to an NRI

Professional fees paid to an NRI follow the non-resident Section 393(2) framework, not the resident professional-services code (1027) — a distinction frequently missed.

How the DTAA TDS Rate Actually Works

There is no single 'DTAA rate' — the applicable rate is the lower of the domestic Act rate or the specific rate in the relevant treaty article, and it differs by country and income type.

TDS on Foreign Remittance Above ₹5 Lakh

Crossing ₹5 lakh in aggregate remittance to a foreign payee generally triggers the requirement for a CA certificate (Form 15CB) in addition to Form 15CA — it does not itself change the TDS rate.

TDS on Sale of Property by an NRI

When buying property from an NRI seller, the buyer must deduct TDS at the capital-gains rate (12.5% for LTCG without indexation, post-23 July 2024) on the full sale value — not the standard 1% domestic-seller rate.

TDS on Rent Paid to an NRI Landlord

Rent paid to an NRI landlord follows Section 393(2), not the domestic Code 129 (194-IB) rate of 2% — the correct non-resident rate is generally 30% on the rental income, subject to DTAA relief.

TDS on Interest Paid to an NRI

TDS on interest to an NRI varies by instrument — NRO deposits generally attract 30%, while external commercial borrowings and specified bonds carry concessional rates as low as 4-9%.

TDS on Dividend Paid to an NRI Shareholder

Dividend paid to an NRI shareholder attracts 20% TDS under Section 393(2), which is typically higher than the domestic resident dividend rate — but a DTAA can meaningfully reduce it.

TDS on Payment to a Foreign Influencer

Payment to a foreign influencer for promotional content generally attracts 20% TDS under Section 393(2), classified as FTS or royalty depending on the specific rights granted.

TDS on Payment to a Foreign Freelancer

Payment to a foreign freelancer for design, development, writing, or similar services generally attracts 20% TDS as FTS under Section 393(2), absent DTAA relief.