TDS on Outward Remittances
Payments made from India to a non-resident, whether for royalties, technical fees, dividends, or purchase of services, generally attract withholding tax obligations under the Income Tax Act 1961. Hegde Hegde and Associates LLP provides advisory and certification support for tax deducted at source on outward remittances.
Partner reviewedDocumented processBengaluru office
Why TDS on Outward Remittances Matters
Section 195 of the Income Tax Act 1961 requires that tax be deducted at source on payments to non-residents that are chargeable to tax in India, at rates determined by the Act or the applicable DTAA, whichever is more beneficial to the taxpayer.
Incorrect withholding tax computation on outward remittances can result in disallowance of the expense, interest, and penalties for the remitter, in addition to complications for the recipient’s tax position.
Why Businesses Need This Service
- Payments to overseas vendors, consultants, or group entities for services, royalties, or technical fees.
- Dividend or interest remittances to non-resident shareholders or lenders.
- Import payments or other remittances requiring bank certification before transfer.
- Uncertainty over whether a specific payment is chargeable to tax in India under Section 195.
- A need to determine the applicable DTAA rate for a specific category of payment.
- Banks requiring Form 15CA/15CB documentation before processing the remittance.
Our Approach
- 01
Assessment
Reviewing the nature of the payment and the recipient’s tax residency.
- 02
Planning
Determining applicability of Section 195 and the relevant DTAA provisions.
- 03
Documentation
Collating tax residency certificates, no-PE declarations, and supporting agreements.
- 04
Execution
Computing the applicable withholding tax rate and preparing certification.
- 05
CA Review
Independent review of the tax position before certification is issued.
- 06
Compliance Verification
Cross-checking the computation against Income Tax Act and DTAA provisions.
- 07
Reporting
Issuance of Form 15CB certification and filing support for Form 15CA.
- 08
Continuous Support
Advisory on recurring remittance categories to streamline future transactions.
Scope of Services
- Determination of taxability of remittances under Section 195
- DTAA rate analysis and treaty benefit eligibility review
- Form 15CB certification by a Chartered Accountant
- Form 15CA filing support (Parts A, B, C, or D as applicable)
- Review of tax residency certificates and no-permanent-establishment declarations
- Advisory on withholding tax for recurring categories of cross-border payment
- Support during assessment or scrutiny relating to remittance-related TDS positions
Business Benefits
- Reduced risk of disallowance, interest, or penalty on cross-border payments.
- Faster processing of remittances through authorised dealer banks.
- Correct application of DTAA benefits, avoiding excess withholding tax.
- Documented support for the tax position taken on each remittance.
- Consistent treatment across recurring categories of overseas payment.
Why Choose Hegde Hegde and Associates LLP
- Form 15CB certification issued by a qualified Chartered Accountant after independent review.
- Remittance advisory coordinated with our broader international taxation practice.
- Working knowledge of India’s DTAA network and authorised dealer bank documentation requirements.
- Turnaround aligned with the transactional nature of remittance certification.
- Practical advisory grounded in current Indian withholding tax jurisprudence.
Industries We Serve
Our remittance advisory engagements support technology and IT services companies making payments to overseas vendors, import-dependent manufacturing businesses, and startups with foreign investors or group entities requiring dividend or fee remittances.
Technology & IT services
D2C & e-commerce
Manufacturing
Startups & funded ventures
Professional services
NRI individuals
Healthcare
Real estate
Financial institutions
NGOs & trusts
Hospitality
Education
Our Process
Each stage produces a defined deliverable, and nothing is issued to a client before the Chartered Accountant review stage is complete.
- 01
Discovery
Understanding the nature and recipient of the proposed remittance.
- 02
Assessment
Reviewing taxability under Section 195 and applicable DTAA.
- 03
Documentation Review
Collating supporting certificates and declarations.
- 04
Execution
Computing the applicable rate and preparing certification.
- 05
CA Review
Independent review before Form 15CB is issued.
- 06
Reporting
Certification and filing support for Form 15CA/15CB.
- 07
Ongoing Support
Advisory for future recurring remittances.
Frequently Asked Questions
TDS under Section 195 applies to payments to non-residents that are chargeable to tax in India. Not every payment is chargeable to tax, so each remittance requires an individual assessment.
Form 15CA is a self-declaration filed by the remitter regarding the tax treatment of the remittance. Form 15CB is a certificate issued by a Chartered Accountant confirming the tax computation and applicable rate, required for most remittances above prescribed thresholds.
Yes, where the recipient is a tax resident of a country with which India has a DTAA, and the required documentation, including a tax residency certificate, is furnished, the treaty rate may apply if more beneficial than the domestic rate.
Certain categories of remittance are exempted from this requirement under the specified list issued by the tax authorities. Each remittance should be assessed individually to determine applicability.
Incorrect or non-deduction of TDS can result in disallowance of the related expense under the Income Tax Act, in addition to interest and penalty exposure for the remitter.
Discuss Your Outward Remittance Requirements
Whether you need certification for a one-time remittance or advisory on a recurring category of cross-border payment, our team is available to discuss your specific requirement.
Content reviewed by CA Ramkumar Hegde, Partner, Hegde Hegde and Associates LLP.