TDS on Royalty paid to non residents hiked to 20% in the Finance Bill 2023.


TDS on Royalty paid to non residents hiked to 20% in the Finance Bill 2023

  1. Tax Rate u/s 115A for Royalty / FTS has been increased from 10% to 20% in the Finance Bill passed by the Parliament.

  1. Section 115A of the Income Tax Act has been amended to tax non-resident on royalty or Fees for Technical Services at 20%.

  1. Earlier, tax rate u/s 115A was 10%. Change of Tax Rate from 10% to 20% will impact to the non-residents of the countries with whom India doesn’t have Double Taxation Avoidance Agreement (DTAA).

  1. Now, they will be required to pay higher rate of 20% on income from Royalty and FTS.

  1. As per Sec 115A, a non resident is not required to file his return of income U/S 139(1), if TDS has been deducted at rate not less than prescribed by Sec 115A(1).

  1. Most of the DTAAs prescribe TDS rate of 10%. So TDS could be deducted by considering the beneficial rate under DTAA ie 10%. However a return of income will have to filed in such a case, which is an additional burden for the non resident.

  1. This amendment shall be applicable for AY 2024-25.

Leave a Comment

Your email address will not be published.

the taxtalk

online portal for tax news, update, judgment, article, circular, income tax, gst, notification Simplifying the tax and tax laws is the main motto of the team tax talk, solving