Section 195 of Income Tax Act - TDS Applicability for NRI
Section 195 – TDS Applicability for NRIs (Quick Guide)
Section 195 of the Income Tax Act requires TDS on any taxable payment (other than salary) made to a Non-Resident Indian (NRI). There is no minimum threshold—TDS applies to all taxable amounts.
When Does Section 195 Apply?
TDS must be deducted on payments to NRIs such as:
- Interest & dividends
- Royalty/technical fees
- Capital gains (property, shares, securities)
- Any other taxable income (except salary)
Any person—resident or non-resident—making such payments must deduct TDS.
Need Help Filing TDS, Applying for TAN, or Downloading Form 16A/16B?
If you need assistance with TDS deduction under Section 195, TAN registration, Form 27Q filing, Form 16A issuance, or any NRI tax compliance, Respace Infra will guide you through the complete process.
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Who is an NRI?
A person who does not meet the Indian residency conditions (182 days / 60+365 days rule) is treated as a non-resident.
TDS Rates for FY 2025–26 (Quick View)
- Investment income: 20%
- LTCG (Section 115E assets): 12.5%
- Listed share LTCG (112A): 10–12.5%
- Other LTCG: 12.5%
- Royalty/technical fees: 20%
- Other income: 30%
DTAA rates may be lower. Surcharge & cess apply on Finance Act rates.
TDS Payment & Compliance Under Section 195 – Key Pointers
- The buyer/deductor must obtain a TAN and have both their own PAN and the NRI’s PAN.
- TDS must be deducted at the time of making payment to the NRI.
- The deducted TDS must be deposited using Challan 281 on or before the 7th of the next month.
- TDS can be deposited online or through authorised banks.
- The buyer must file the quarterly TDS return (Form 27Q) within the due dates: 30 July, 31 Oct, 31 Jan, and 31 May.
- After filing the return, the buyer must issue the TDS certificate (Form 16A) to the NRI within 15 days of the return due date.
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