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What is TDS and how does it affect our Indian company?
TDS stands for Tax Deducted at Source. TDS is the Indian government's withholding tax system. Your Indian company will have to deduct TDS before making the following payments:
• Salaries payable to employees (according to income tax slab rates).
• Payments to contractors and consultants.
• Rent payments exceeding 50,000 rupees per month (10%).
• Payment of dividends to foreign shareholders (10%-20%).
• Payment of royalties to foreign entities (10%-20%).
Note: TDS deducted by the company has to be deposited by the 7th of the next month. Quarterly returns in Form 26Q/27Q are required to be filed. Non-compliance in TDS will incur interest and penalties.
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