The contract says the vendor gets a net amount

Section 393(10) says that, other than the case in section 392(2)(a), where under an agreement or arrangement the tax chargeable on the recipient's income is to be borne by the payer, then for deduction the income is increased to an amount which, after deduction of tax, equals the net amount payable under that agreement.

That is the whole of the statutory sentence checked on 26 October 2026. In words: you do not withhold the tax out of the vendor's agreed net. You work out a larger income such that, once the tax is taken off, the vendor is left with the net the contract promised.

This page is about a non-salary payment to a foreign vendor. It does not restate the section 392(2)(a) carve-out.

If the agreed net is N and the rate that applies to the grossed-up income is r, the income section 393(10) describes is N / (1 − r). The tax is that income minus N.

Illustration only. The 10% is not the rate for any named payment. A vendor is to receive ₹1,00,000 net, and the rate used for the illustration is 10%.

Use the rate that actually applies: the Act rate or the treaty rate, after you know whether Form 41 and the tax residency certificate are in place, and whether section 397(2) or Rule 217 changes the deduction. Form 146 asks whether the tax payable has been grossed up under section 393(10). The old section for this gross-up was section 195A.

Gross-up changes the sum on which tax is computed. It does not remove the duty to deduct. Under section 40(a)(i) of the Income-tax Act, 1961, where tax deductible on a payment to a non-resident was not deducted, the whole of that expense is disallowed, with a cure only where the non-resident files an Indian return, pays the tax and furnishes the prescribed certificate. That is the rule described on the foreign SaaS page.

The 2025 Act section number for that disallowance is not stated on this page.

GST on an imported service is a separate charge. If the vendor's invoice carries no GST, the reverse-charge page is the one that deals with who pays it.