Skip to content

Vendor Management | Section 195 (Foreign Vendor TDS)

Section 195 done right. DTAA rate, Form 15CA + 15CB, remittance evidence.

Foreign vendors tagged at the master with TRC and DTAA position. Section 195 deduction applied at the bill: DTAA rate where TRC is on file, slab rate otherwise. Form 15CA Part D and Form 15CB metadata captured. Remittance evidence packaged for the AD bank.

Start free trialBook a demo
Section 195 Tds

How it works

From foreign-vendor bill to AD-bank-ready remittance.

Step 01

Foreign vendor tagged at master

Country, tax residency, TRC validity, DTAA position, NoPE certificate (where applicable) captured at the vendor master. PAN optional (some foreign vendors don't have one).

Step 02

Section 195 at the bill

When the bill posts, Section 195 deduction applies. Rate = DTAA rate where TRC is on file, otherwise the slab rate (typically 20%, 40%, or higher per Section 206AA where no PAN).

Step 03

Form 15CA Part D drafted

Form 15CA Part D (for remittances above ₹5 lakh) drafted with vendor details, remittance amount, applicable section, and DTAA rate.

Step 04

Form 15CB drafted (for CA review)

Form 15CB (CA certificate) drafted from the bill data. CA reviews, certifies and signs with DSC. Both 15CA and 15CB attach to the bill.

Step 05

AD bank remittance pack

Form 15CA, Form 15CB, vendor invoice, contract evidence and TRC packaged for the AD (Authorised Dealer) bank. Bank releases the remittance against the pack.

What the system does

Capability, input, output.

  • Foreign-vendor master

    Input
    Country + tax residency + TRC + DTAA
    Output
    Tagged vendor with applicable rate

  • DTAA rate lookup

    Input
    Country + service category
    Output
    DTAA rate (typically 10-15%)

  • Section 195 at bill

    Input
    Bill + foreign-vendor tag
    Output
    TDS deduction at the right rate

  • Form 15CA Part D

    Input
    Remittance metadata
    Output
    Drafted Form 15CA

  • Form 15CB

    Input
    Bill data + CA review
    Output
    CA-certified Form 15CB

  • AD bank pack

    Input
    All forms + invoice + TRC
    Output
    Hash-verified remittance pack

  • Form 27Q filing

    Input
    Section 195 deductions per quarter
    Output
    Form 27Q draft

Compliance + integrations

International tax compliance, end to end.

Section 195 plus FEMA plus DTAA plus AD bank requirements. Each layer is a real compliance step. The system handles the deduction, the documentation and the audit trail.

Regulations we work within

  • Section 195, Income Tax Act

    Deduction at source on foreign payments.

  • Section 90 (DTAA)

    Lower rate where DTAA applies and TRC is on file.

  • Section 206AA

    Higher rate where no PAN.

  • Form 15CA / 15CB

    Remittance reporting per Rule 37BB.

  • FEMA

    Foreign-currency remittance reporting.

  • Form 27Q

    Quarterly return for non-resident TDS.

Connects to

  • AD Bank Remittance pack delivery
  • TRACES Form 27Q upload
  • CBDT Vendor PAN check (where applicable)

Section 195 (Foreign Vendor TDS) FAQ

What buyers ask.

TRC. What is it and how is it captured?

Tax Residency Certificate is issued by the foreign country's tax authority confirming that the vendor is a resident there for tax purposes. Required for DTAA benefits. Captured at the vendor master with validity dates. Expiry alerts before the validity ends.

No PAN, no TRC. What rate applies?

Section 206AA applies: higher of (a) 20% or (b) the rate in Section 195 read with DTAA. Without PAN, no DTAA benefit. The system picks up the no-PAN, no-TRC case and applies the higher rate automatically.

Form 15CA Part A vs Part D?

Part A is for remittances up to ₹5 lakh. Part D is for remittances above ₹5 lakh that are not chargeable to tax in India. Most foreign payments above ₹5 lakh need Part C (with Form 15CB) where chargeable to tax. The system applies the right part based on amount and chargeability.

Form 15CB. Who certifies?

A practising Chartered Accountant certifies Form 15CB. The system drafts the form from the bill and remittance data; the CA reviews, certifies and signs with DSC. The certified form attaches to the bill and to the AD bank pack.

Software royalty to a US vendor. How is the rate determined?

Software royalty has been a contested area. Per the Engineering Analysis case (Supreme Court 2021) and subsequent CBDT clarifications, payments for off-the-shelf software (where no copyright is transferred) are not royalty under Section 9. The system flags software-payment cases for case-specific review by the CA.

More in Vendor Management

Related features

Run a foreign-vendor bill through the Section 195 flow.

Tag a foreign vendor with country and TRC. Post a bill. The system applies the DTAA rate, drafts Form 15CA, surfaces Form 15CB for CA review, packages the AD bank pack.

Start free trialBook a demo