Section 195: TDS on payments to non-residents
Section 195 of the Income-tax Act, 1961 covers TDS on payments to non-residents. From 1 April 2026 the same deduction sits in Section 393(2), Table Sl. No. 17, Income-tax Act, 2025. The rate, threshold and conditions below were read from incometaxindia.gov.in on 13 October 2026.
Section 195 at a glance
| Nature of payment | Any interest (other than items at Sl. 2-5 of the table) or any other sum chargeable under the Act, not being salary, paid to a non-resident (not a company) or a foreign company |
|---|---|
| Who deducts | Any person |
| Income-tax Act, 2025 | Section 393(2), Table Sl. No. 17, Income-tax Act, 2025 |
TDS rate
| Payee | Rate |
|---|---|
| Non-resident (non-company) or foreign company | Rates in force (per Finance Act; DTAA rate may apply) |
Rates exclude surcharge and health and education cess.
Conditions and exceptions
- Specific non-resident items have fixed rates in s.393(2) (e.g. Sl. 10 mutual fund income 20%, Sl. 12/14 LTCG 12.5%, Sl. 1 sportsmen 20%).
- No-PAN: s.397 20% rule applies; s.397(c) carves out certain long-term bond interest to non-residents.
Which Act applies to your payment
The 1961 Act governs a payment if it was credited or paid on or before 31 March 2026, whichever happened first. If both happen on or after 1 April 2026, the 2025 Act applies.
Source and verification
Income Tax Department: Section 393(2), Table Sl. No. 17, Income-tax Act, 2025 →
Last verified on 13 October 2026. Finance Acts change TDS rates and thresholds; check the source before you deduct. This is general information, not advice for your situation.
Related
Frequently asked questions
What is the TDS rate under section 195?
Rates in force (per Finance Act; DTAA rate may apply) for non-resident (non-company) or foreign company. Rates exclude surcharge and cess.
What is section 195 called under the new Income-tax Act?
From 1 April 2026 it is Section 393(2), Table Sl. No. 17, Income-tax Act, 2025. The e-filing portal's TDS FAQ says the rates and thresholds were carried over; the section number is what changed.
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