Section 195 of ITA, 1961 : Section 195: Other Sums
ITA, 1961
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Explanation using Example
Imagine a scenario where an Indian software development company, Tech Innovations Pvt. Ltd., enters into a contract with a Singapore-based company, Web Solutions Inc., for providing specialized software services. As per the agreement, Tech Innovations Pvt. Ltd. is to pay Web Solutions Inc. a fee of INR 10 million upon completion of the project.
Under Section 195 of the Income-tax Act, 1961, before making the payment to Web Solutions Inc., Tech Innovations Pvt. Ltd. is required to deduct income tax from the payment amount since Web Solutions Inc. is a foreign company. The deduction must be made at the prevailing tax rates in ...
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