Sections 195 and 197: TDS on Payments to Non-Residents and Lower/Nil Deduction Certificate

Sections 195 and 197: TDS on Payments to Non-Residents and Lower/Nil Deduction Certificate

Sections 195 and 197 are the two key sections of the Income Tax Act 1961. Both of these sections are related to the non-resident Indians (NRIs) and foreign companies; however, their income is taxable in India. Section 195 requires TDS to be deducted on taxable payments made to non-residents in India. Section 197 allows non-residents to apply for a lower or nil TDS certificate to avoid excess tax deduction and cash flow blockage, subject to approval by the tax authorities.

Here are some commonly asked questions related to Sections 195 and 197: