Overview of Rates for Deduction of Tax at Source (TDS) under the Income Tax Act

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deduction of tax at source; TDS

Table of Contents

1. Rates for deduction of tax at source under the IT Act for NRs as per the Finance Act, 2023

2. Surcharge on Income Tax

3. Tax deduction at source under the DTAAs

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1. Rates for deduction of tax at source under the IT Act for NRs (As per Part II of the First Schedule) as per the Finance Act, 2023

In every case where, under the provisions of sections 193, 194A, 194B, 194BA, 194BB, 194D, 194LBA, 194LBB, 194LBC and 195 of the IT Act, tax is to be deducted at the “rates in force”, deduction shall be made from the income  of the NR which is subject to tax deduction, at the following rates:

Category of taxpayer and nature of income

Rate of
income-tax
1. In the case of a NR person which is not a company—
(i) in the case of an NRI:
(A) on any investment income 20%;
(B) on income by way of long-term capital gains referred to in section 115E or sub-clause (iii) of clause (c) of sub-section (1) of section 112 10%;
(C) on income by way of long-term capital gains referred to in section 112A exceeding INR 1 lakh 10%;
(D) on other income by way of long-term capital gains not being long-term capital gains referred to in clauses (33) and (36) of section 10 20%;
(E) on income by way of short-term capital gains referred to in section 111A 15%;
(F) on income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in section 194LB or section 194LC) 20%;
(G) on income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on 20%;
a subject referred to in the first proviso to sub-section (1A) of section 115A of the IT Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of section 115A of the IT Act, to a person resident in India
(H) on income by way of royalty [not being royalty of the nature referred to in sub-item (b) (i) (G) ] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter
included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy		 20%;
(I) on income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy 20%;
(J) on income by way of winnings from lotteries, crossword puzzles, card games, other games of any sort (other than winnings from online gamers) 30%;
(K) on income by way of winnings from horse races 30%;
(L) on income by way of winnings from online games 30%
(M) on the income by way of dividend referred to in the proviso to sub-clause (A) of clause (a) of sub-section (1) of section 115A 10%;
(N) on income by way of dividend other that the income referred to in sub-item (b)(i)(M) 20%
(O) on the whole of the other income 30%;
(ii) in the case of any other person:
(A) on income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in section 194LB or section 194LC) 20%;
(B) on income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is 20%;
in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to sub-section (1A) of section 115A of the IT Act, to the Indian concern, in respect of any computer software referred to in the second proviso to sub-section (1A) of section 115A of the IT Act, to a person resident in India
(C) on income by way of royalty [not being royalty of the nature referred to in sub-item (b)(ii)(B)] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy 20%;
(D) on income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy 20%;
(E) on income by way of winnings from lotteries, crossword puzzles, card games, and other games of any sort (other than winnings from online games) 30%;
(F) on income by way of winnings from horse races 30%;
(G) on income by way of winnings from online games 30%
(H) on income by way of short-term capital gains referred to in section 111A 15%;
(I) on income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-section (1) of section 112 10%;
(J) on income by way of long-term capital gains referred to in section 112A exceeding INR 1 lakh 10%;
(K) on income by way of other long-term capital gains [not being long-term capital gains referred to in clauses (33) and (36) of section 10] 20%;
(L) on income by way of dividend referred to in the proviso to sub-clause (A) of clause (a) of sub-section (1) of section 115A 10%;
(M) on income by way of dividend other than the income referred to in sub-item (b)(ii)(L) 20%;
(N) on the whole of the other income 30%;
2. In the case of a NR company:
(i) on income by way of winnings from lotteries, crossword puzzles, card games, and other games of any sort (other than winnings from online games) 30%;
(ii) on income by way of winnings from horse races 30%;
(iii) on income by way of winnings from online games 30%;
(iv) on income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in section 194LB or section 194LC) 20%;
(v) on income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1976 where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to sub-section (1A) of section 115A of the IT Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of section 115A of the IT Act, to a person resident in India 20%;
(vi) on income by way of royalty [not being royalty of the nature referred to in sub-item (b)(iv)] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy—
(A) where the agreement is made after the 31st day of March, 1961 but before the 1st day of April, 1976 50%;
(B) where the agreement is made after the 31st day of March, 1976 20%;
(vii) on income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern
and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy—
(A) where the agreement is made after the 29th day of February, 1964 but before the 1st day of April, 1976 50%;
(B) where the agreement is made after the 31st day of March, 1976 20%;
(viii) on income by way of short-term capital gains referred to in section 111A 15%;
(ix) on income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-section (1) of section 112 10%;
(x)  on income by way of long-term capital gains referred to in section 112A exceeding INR 1 lakh 10%;
(xi) on income by way of other long-term capital gains [not being long-term capital gains referred to in clauses (33) and (36) of section 10] 20%;
(xii) on income by way of dividend, referred to in the proviso to sub-clause (A) of clause (a) of sub-section (1) of section 115A 10%;
(xiii) on income by way of dividend (other than the income referred to in item (b)(xii)) 20%;
(xiv)  on any other income 40%

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2. Surcharge on income-tax

The amount of income-tax deducted shall be increased by a surcharge:

(a) in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the IT Act, being a NR, calculated:

I. at the rate of 10% of such tax, where the income or the
aggregate of such incomes (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the IT Act) paid or likely to be paid and subject to the deduction exceeds INR 50 lakh but does not exceed INR 1 crore;

II. at the rate of 15% of such tax, where the income or the
aggregate of such incomes (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the IT Act) paid or likely to be paid and subject to the deduction exceeds INR 1 crore but does not exceed INR 2 crores;

III. at the rate of 25% of such tax, where the income or the
aggregate of such incomes (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the IT Act) paid or likely to be paid and subject to the deduction exceeds INR 2 crores but does not exceed INR 5 crores;

IV. at the rate of 37% of such tax, where the income or the
aggregate of such incomes (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the IT Act) paid or likely to be paid and subject to the deduction exceeds INR 5 crores; and

V. at the rate of 15% of such tax, where the income or the
aggregate of such incomes (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the IT Act) paid or likely to be paid and subject to the deduction exceeds INR 2 crores but is not covered under sub-clauses III and IV.

However, in case where the total income includes any
income chargeable under sections 111A, 112 and 112A of the IT Act, the rate of surcharge on the amount of Income-tax deducted in respect of that part of income shall not exceed 15%. Further, where the income of such person is chargeable to tax under section 115BAC(1A) of the IT Act, the rate of surcharge shall not exceed 25%.

(b) in the case of every co-operative society, being a NR, calculated:

I. at the rate of 7% of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds INR 1 crore but does not exceed INR 10 crores.

II. at the rate of 12%, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds INR 10 crores.

(c) in the case of every firm, being a non-resident, calculated at the rate of 12%, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds INR 1 crore.

(d) in the case of every NR company, calculated:

I at the rate of 2% of such income-tax where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds INR 1 crore but does not exceed INR 10 crore; and

II at the rate of 5% of such income-tax where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds INR 10 crores.

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3. Tax deduction at source under the DTAAs (Source: Income Tax Department Website, updated upto Finance Act, 2022 – https://incometaxindia.gov.in/pages/international-taxation.aspx)

Country Dividend Interest Royalty Fee for Technical Services
Albania 10% 10% [Note1] 10% 10%
Armenia 10% 10% [Note1] 10% 10%
Australia 15% 15% 10%/15%

[Note 2]

 10%/15%

[Note 2]
Austria 10% 10% [Note1] 10% 10%
Bangladesh (a) 10% (if at least 10% of the capital of the company paying the dividend is held by the recipient company);

(b) 15% in all other cases

 10% [Note1] 10% No separate provision
Belarus (a) 10%, if paid to a company holding 25% shares;

(b) 15%, in all other cases

 10% [Note1] 15% 15%
Belgium 15% 15% (10% if loan is granted by a bank) 10% 10%
Bhutan 10% 10% [Note 1] 10% 10%
Botswana (a) 7.5%, if shareholder is a company and holds at least 10% [Note1] 10% 10%
25% shares in the investee-company;

(b) 10%, in all other cases
Brazil 15% 15% [Note1] (a) 25% for use of trademark;

(b) 15% for others

 No separate provision
Bulgaria 15% 15% [Note1] (a) 15% of royalty relating to literary, artistic, scientific works other than films or tapes used for radio or television broadcasting;

(b) 20%, in other cases

 20%
Canada (a) 15%, if at least 10% of the voting powers in the company, paying the dividends, is controlled by the recipient company;

(b) 25%, in other cases

 15% [Note1] 10%-20% 10%-20%
China 10% 10% [Note1] 10% 10%
Columbia 5% 10% [Note1] 10% 10%
Croatia (a) 5% (if at least 10% of the capital of the company paying the dividend is held by the recipient company);

(b) 15% in all other cases

 10% [Note1] 10% 10%
Cyprus 10% 10% [Note1] 10% 10%
Czech Republic [Note 5] 10% 10% [Note1] 10% 10%
Denmark (a) 15%, if at least 25% of the shares of the company paying the dividend is held by the recipient company;

(b) 25%, in other cases

 (a) 10% if loan is granted by bank;

(b) 15% for others [Note1]

 20% 20%
Estonia 10% 10% [Note1] 10% 10%
Ethiopia 7.5% 10% [Note1] 10% 10%
Finland 10% 10% [Note1] 10% 10%
Fiji 5% 10% [Note 1] 10% 10%
France 10% 10% [Note1] 10% 10%
Georgia 10% 10% [Note1] 10% 10%
Germany 10% 10% [Note1] 10% 10%
Greece 20% 20% 10% No separate provision
Hongkong 5% 10% [Note1] 10% 10%
Hungary 10% 10% [Note1] 10% 10%
Indonesia 10% 10% [Note1] 10% 10%
Iceland 10% 10% [Note1] 10% 10%
Iran 10% 10% 10% 10%
Ireland 10% 10% [Note1] 10% 10%
Israel 10% 10% [Note1] 10% 10%
Italy (a) 15% if at least 10% of the shares of the company paying dividend is beneficially owned by the recipient company;

(b) 25% in other cases

 15% [Note1] 20% 20%
Japan 10% 10% [Note1] 10% 10%
Jordan 10% 10% [Note1] 20% 20%
Kazakhstan 10% 10% [Note1] 10% 10%
Kenya 10% 10% 10% 10%
Korea 15% 10% 10% 10%
Kuwait 10% [Note 1] 10% 10% 10%
Kyrgyz Republic 10% 10% [Note1] 15% 15%
Libyan Arab Jamahiriya 20% 20% 30% No separate provision
Latvia 10% 10% [Note1] 10% 10%
Lithuania 5%*, 15% 10% [Note1] 10% 10%
Luxembourg 10% 10% [Note1] 10% 10%
Malaysia 5% 10% [Note1] 10% 10%
Malta 10% 10% [Note1] 10% 10%
Mongolia 15% 15% [Note1] 15% 15%
Mauritius (a) 5%, if at least 10% of the capital of the company paying the dividend is held by the recipient company;

(b) 15%, in other cases

 7.5% 15% 10%
Montenegro 5% (in some cases 15%) 10% [Note1] 10% 10%
Myanmar 5% 10% [Note1] 10% No separate provision
Morocco 10% 10% [Note1] 10% 10%
Mozambique 7.5% 10% [Note1] 10% No separate provision
Macedonia 10% 10% [Note 1] 10% 10%
Namibia 10% 10% [Note1] 10% 10%
Nepal 5%**, 10% 10% [Note1] 15% No separate provision
Netherlands 10% 10% [Note1] 10% 10%
New Zealand 15% 10% [Note1] 10% 10%
Norway 10% 10% [Note1] 10% 10%
Oman (a) 10%, if at least 10% of shares are held by the recipient company;

(b) 12.5%, in other cases

 10% [Note1] 15% 15%
Philippines (a) 15%, if at least 10% of the shares of the company paying the dividend is held by the recipient company;

(b) 20%, in other cases

 (a) 10%, if interest is received by a financial institution or insurance company;

(b) 15% in other cases [Note1]

 15% if it is payable in pursuance of any collaboration agreement approved by the Government of India No separate provision
Poland 10% 10% [Note1] 15% 15%
Portuguese Republic 10%***/15% 10% 10% 10%
Qatar (a) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company;

(b) 10%, in other cases

 10% [Note1] 10% 10%
Romania 10% 10% [Note1] 10% 10%
Russian Federation 10% 10% [Note1] 10% 10%
Saudi Arabia 5% 10% [Note1] 10% No separate provision
Serbia (a) 5%, if recipient is company and holds 25% shares;

(b) 15%, in any other case

 10% [Note1] 10% 10%
Singapore (a) 10%, if at least 25% of the shares of the company paying the dividend is held by the recipient company;

(b) 15%, in other cases

 (a) 10%, if loan is granted by a bank or similar institute including an insurance company;

(b) 15%, in all other cases

 10% 10%
Slovenia (a) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company;

(b) 15%, in other cases

 10% 10% 10%
South Africa 10% 10% [Note1] 10% 10%
Spain 15% 15% [Note1] 10%/20%

[Note 3]

 20%

[Note 3]
Sri Lanka 7.5% 10% [Note1] 10% 10%
Sudan 10% 10% [Note1] 10% 10%
Sweden 10% 10% [Note1] 10% 10%
Swiss Confederation 10% 10% [Note1] 10% 10%
Syrian Arab Republic (a) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company;

(b) 10%, in other cases

 10% [Note1] 10% No separate provision
Taipei 12.5% 10% 10% 10%
Tajikistan (a) 5%, if at least 25% of the shares of the company paying the dividend is held by the recipient company;

(b) 10%, in other cases

 10% [Note1] 10% No separate provision
Tanzania 5%****, 10% 10% 10% No separate provision
Thailand 10% 10% [Note1] 10% No separate provision
Trinidad and Tobago 10% 10% [Note1] 10% 10%
Turkey 15% (a) 10% if loan is granted by a bank, etc.; 15% 15%
(b) 15% in other cases [Note1]
Turkmenistan 10% 10% [Note1] 10% 10%
Uganda 10% 10%[Note1] 10% 10%
Ukraine (a) 10%, if at least 25% of the shares of the company paying the dividend is held by the recipient company;

(b) 15%, in other cases

 10% [Note1] 10% 10%
United Arab Emirates 10% (a) 5% if loan is granted by a bank/similar financial institute;

(b) 12.5%, in other cases

 10% No separate provision
United Mexican States 10% 10% [Note1] 10% 10%
United Kingdom 15%/10%

(Note 4)

 (a) 10%, if interest is paid to a bank;

(b) 15%, in other cases

[Note1]

 10%/15% [Note 2] 10%/15% [Note 2]
United States (a) 15%, if at least 10% of the voting stock of the company paying the dividend is held by the recipient company;

(b) 25% in other cases

 (a) 10% if loan is granted by a bank/similar institute including insurance company;

(b) 15% for others

 10%/15% [Note 2] 10%/15% [Note 2]
Uruguay 5% 10% [Note1] 10% 10%
Uzbekistan 10% 10% [Note1] 10% 10%
Vietnam 10% 10% [Note1] 10% 10%
Zambia (a) 5%, if at least 25% of the shares of the company paying the dividend is held by a recipient company for a period of at least 6 months prior to the date of payment of the dividend;

(b) 15% in other cases

 10% [Note1] 10% 10%

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*If the beneficial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends.

**5% if beneficial owner of shares is a company and it holds at least 10% of shares of the company paying the dividends.

*** if the beneficial owner is a company that, for an uninterrupted period of two fiscal years prior to the payment of the dividend, owns directly at least 25 per cent of the capital stock of the company paying the dividends.

****5% if recipient company owns at least 25% share in the company paying the dividend.

1. Dividend/interest earned by the Government and certain specified institutions,inter alia, Reserve Bank of India is exempt from taxation in the country of source (subject to certain condition).

2. Royalties and fees for technical services would be taxable in the country of source at the rates prescribed for different categories of royalties and fees for technical services. These rates shall be subject to various conditions and nature of services/royalty for which payment is made. For detailed conditions refer to relevant Double Taxation Avoidance Agreements.

3. Royalties and fees for technical services would be taxable in the country of source at the following rates:

a. 10 per cent in case of royalties relating to the payments for the use of, or the right to use, industrial, commercial or scientific equipment;

b. 20 per cent in case of fees for technical services and other royalties.

4. (a) 15 per cent of the gross amount of the dividends where those dividends are paid out of income (including gains) deriveddirectly or indirectly from immovable property within the meaning of Article 6 by an investment vehicle which distributes most of this income annually and whose income from such immovable property is exempted from tax;

(b) 10 per cent of the gross amount of the dividends, in all other cases

5. The CBDT has clarified that DTAA signed with Government of the Czech Republic on the 27th January 1986 continues to be applicable to the residents of the Slovak Republic. [Notification No. 25, dated 23-03-2015]

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