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  • Withholding Tax Rates

    What is Withholding Tax?

    Person who is making payment to a non-resident or a foreign company is required to withhold tax. The tax is deductible at the rate prescribed under the Act or relevant Double Taxation Avoidance Agreement (DTAA).

    Withholding tax is an obligation on the part of the payer to withhold tax at the time of paying rent, commission, salary, professional services, contract etc. at the rates specified in the tax rule.

    Withholding taxes are the government’s way of ensuring that proper taxes are paid on item by way of either withholding or deducting the relevant tax amount from the income of an individual or an enterprise.

    When payment has to be made for a non-resident Indian, the payer is obliged to deduct tax at source. If the payment is not taxable, then the payer must make an application to the assessing officer to determine the proportion that is chargeable to tax. The tax is then to be deducted only on that chargeable proportion.

    The tax must be deducted at the rate prescribed or rate specified in Double Taxation Avoidance Agreement, whichever is beneficial to the assessee.

    What is the Withholding Tax Rate in India?

    The current rate for withholding tax in India for making payments to non-residents are:

    • Interest – 20%
    • Dividends paid by domestic companies – Nil
    • Royalties – 10%
    • Technical services – 10%
    • Individuals – 30% of the income
    • Companies – 40% of the net income.

    Note: The rates are general and are applicable in respect of countries that India does not have a Double Taxation Avoidance Agreement.

    Countries with which India has Double Taxation Avoidance Agreement, the taxes are determined as follows:

    Country

    Dividend

    Interest

    Royalty

    Technical service fee

    Albania

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Armenia

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Australia

    15%

    15%

    • 10% in case of rental of equipment or services

    • 15% if payer is Government or specified organisation during first 5 years of agreement

    • 20% in other cases during first 5 years of agreement

    • 15% in subsequent years

    Same as the royalty

    Austria

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Bangladesh

    10% if the recipient holds at least 10% of the shares of the company paying dividends

    15% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    No provision

    Belarus

    10% if the recipient holds at least 25% of the shares of the company paying dividends

    15% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    15%

    15%

    Belgium

    15%`

    15% if loan is granted by bank

    10%

    10%

    Botswana

    7.5% if the recipient holds at least 25% of the shares of the company paying dividends

    10% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Brazil

    15%

    15%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    25% for trademark use

    15% for others

    15%

    Bulgaria

    15%

    15%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    15% for literary, artistic, scientific work other than that used for television or radio

    20% for other cases

    20%

    Canada

    15% if the recipient holds at least 10% of the shares of the company paying dividends

    25% for other cases

    15%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10 – 15%

    10 – 15%

    China

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Columbia

    5%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Croatia

    5% if the recipient holds at least 10% of the shares of the company paying dividends

    15% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Cyprus

    10% if the recipient holds at least 10% of the shares of the company paying dividends

    15% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    15%

    15% or 10%

    Czech Republic

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Denmark

    15% if the recipient holds at least 25% of the shares of the company paying dividends

    25% for other cases

    10% if loan is granted by bank

    15% for others

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    20%

    20%

    Estonia

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Ethiopia

    7.5%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Finland

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Fiji

    5%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    France

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Georgia

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Germany

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Hungary

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Indonesia

    10% if the recipient holds at least 25% of the shares of the company paying dividends

    15% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    15%

    No provision

    Iceland

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Ireland

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Israel

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Italy

    15% if the recipient holds at least 10% of the shares of the company paying dividends

    25% for other cases

    15%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    20%

    20%

    Japan

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Jordan

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    20%

    20%

    Kazakhstan

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Kenya

    15%

    15%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    20%

    17.5%

    Korea

    15% if the recipient holds at least 20% of the shares of the company paying dividends

    20% for other cases

    10% if interest is paid to a bank

    15% for others

    15%

    15%

    Kuwait

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    10%

    Kyrgyz Republic

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    15%

    15%

    Latvia

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Lithuania

    5% if the recipient holds at least 10% of the shares of the company paying dividends

    15%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Luxembourg

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Malaysia

    5%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Malta

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Mongolia

    15%

    15%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    15%

    15%

    Mauritius

    5% if the recipient holds at least 10% of the shares of the company paying dividends

    15% for other cases

    No provision

    15%

    No provision

    Montenegro

    5% or 15%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Myanmar

    5%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    No provision

    Morocco

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Mozambique

    7.5%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    No provision

    Namibia

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Nepal

    5% if the recipient holds at least 25% of the shares of the company paying dividends

    10% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    15%

    No provision

    Netherlands

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    New Zealand

    15%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Norway

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Oman

    10% if the recipient holds at least 10% of the shares of the company paying dividends

    12.5% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    15%

    15%

    Philippines

    15% if the recipient holds at least 10% of the shares of the company paying dividends

    20% for other cases

    10% if interest is paid to financial institution or an insurance company

    15% in other cases

    15% if payable if the collaboration is approved by the Government of India

    No provision

    Poland

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    15%

    15%

    Portuguese Republic

    10% if recipient holds 25% of the capital stock of the company paying dividends

    15%

    10%

    10%

    10%

    Qatar

    5% if the recipient holds at least 10% of the shares of the company paying dividends

    10% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Romania

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Russian Federation

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Saudi Arabia

    5%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    No provision

    Serbia

    5% if the recipient holds at least 25% of the shares of the company paying dividends

    15% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Singapore

    10% if the recipient holds at least 25% of the shares of the company paying dividends

    15% for other cases

    10% of loan is granted by bank

    15% for others

    10%

    10%

    Slovenia

    15% if the recipient holds at least 10% of the shares of the company paying dividends

    15% for other cases

    10%

    10%

    10%

    South Africa

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Spain

    15%

    15%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10% if royalties relating to the payments for use or the right to use, industrial, commercial or scientific equipment.

    20% for technical services and other royalties

    20%

    Sri Lanka

    7.5%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Sudan

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Sweden

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Swiss Confederation

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Syrian Arab Republic

    5% if the recipient holds at least 10% of the shares of the company paying dividends

    10% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    No provision

    Tajikistan

    5% if the recipient holds at least 25% of the shares of the company paying dividends

    10% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    No provision

    Tanzania

    5% if recipient owns 25% share in the company paying the dividend

    10% for others

    10%

    10%

    No provision

    Thailand

    15% if the recipient holds at least 10% of the shares of the company paying dividends

    20% for other cases

    10% of interest is received by a financial institution or insurance company

    25% for others

    15%

    No provision

    Trinidad and Tobago

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Turkey

    15%

    10% if recipient is bank

    15% in other cases

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    15%

    15%

    Turkmenistan

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Uganda

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Ukraine

    10% if the recipient holds at least 25% of the shares of the company paying dividends

    15% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    United Arab Emirates

    10%

    5% if loan granted by bank

    12.5 for other cases

    10%

    No provision

    United Mexican States

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    United Kingdom

    15% - if dividends are paid out of income deriving from movable and immovable property

    10% on other cases

    10% if recipient is bank

    15% in other cases

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10% if royalties relating to the payments for use or the right to use, industrial, commercial or scientific equipment.

    20% for technical services and other royalties

    10% if royalties relating to the payments for use or the right to use, industrial, commercial or scientific equipment.

    20% for technical services and other royalties

    United States

    15% if the recipient holds at least 10% of the shares of the company paying dividends

    25% for other cases

    10% of loan is granted by bank or if you are paying interest to an insurance company

    15% for others

    10% or 15%

    10% or 15%

    Uruguay

    5%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Uzbekistan

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Vietnam

    10%

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    Zambia

    5% if the recipient holds at least 25% of the shares of the company paying dividends

    15% for other cases

    10%

    Dividend or interest earned by government and RBI is exempt from taxation in the country of source

    10%

    10%

    If the person who is required to deduct the sum in accordance with the IT Act does not deduct, he shall be deemed as an ‘assessee in default’ and he will be liable to pay interest and penalty.

    TAX
    Forms:
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