CBDT Instruction On TDS Obligation U/s 195 On Payment To Non-Residents

The CBDT has issued Instruction No. 02/2014 dated 26.02.2014 in which it has referred to the judgements of the Supreme Court in Transmission Corp of A. P. 299 ITR 587 and GE India Technology Pvt. Ltd 327 ITR 456 on the issue of deduction of tax at source u/s 195 while making payments to non-residents. The CBDT has directed AOs u/s 119 that in a case where the assessee fails to deduct TDS u/s 195, the AO cannot treat the whole sum remitted to the non-resident as being chargeable to tax but he has to determine the appropriate proportion of the sum chargeable to tax as mentioned in s. 195(1) for treating the assessee as being in default u/s 201.


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  1. […] under section 40(a)(i) of the Income-tax Act, 1961. The CBDT has referred to its earlier Instruction No. 02/2014 dated 26.02.2014 and clarified that for the purpose of making disallowance of “other sum chargeable” […]

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