The invoice label does not decide the rate
These are domestic base withholding rates for an NRI individual, where the income is chargeable in India. Add applicable surcharge and 4% cess. Treaty relief or a valid lower-deduction certificate can change the result.
| Payment | Domestic base rate | TDS paperwork |
|---|---|---|
| Professional or design work | 20% if qualifying technical/consultancy services under Section 207, formerly 115A; otherwise 30% residual rate where taxable | TAN, Form 144 and Form 131 |
| Interest on an ordinary rupee family loan | 30%; qualifying foreign-currency borrowing by Government/Indian concern has a separate 20% rule | Same |
| NRI agent's commission | 30% residual rate where taxable, unless its actual character attracts a special rate | Same |
| NRI landlord's rent collected by an agent | Normally 30% on the landlord's rent; assess the agent's own remuneration separately | Same, with the correct income recipient |
| Genuine loan principal | No TDS on principal | Keep loan and repayment proof |
Form 144 was Form 27Q; Form 131 was Form 16A. A service supplied from abroad is not automatically exempt, and a non-taxable payment is not made taxable merely by missing treaty papers. Check the contract, use of the service and the payee's Indian business connection.
An individual payer still needs a TAN
If you must deduct on professional income or interest paid to an NRI, obtain a TAN even if you are an individual with no business. A company or firm uses its own TAN. The 1 October 2026 exemption under Section 397(1)(c), formerly Section 203A, is confined to a resident individual or HUF buying immovable property from a non-resident. It does not cover consultancy, interest or rent.
Deduct at credit or payment, whichever is earlier, deposit the tax, file the quarterly Form 144, formerly Form 27Q, and issue Form 131, formerly Form 16A. Use the new forms for FY 2026-27; FY 2025-26 obligations retain the old-year route.
Paying an agent does not turn the NRI owner's rent into the agent's income. Keep the owner's rent and any separate agency invoice distinct. For the rent routine, see the NRI-landlord TDS page.
Forms 145 and 146 before an outward remittance
The remitter's information form is Form 145, formerly Form 15CA. The CA's certificate is Form 146, formerly Form 15CB. Under Rule 220, formerly Rule 37BB, choose the part by taxability and the year's aggregate, not by splitting invoices.
| Position | Form 145 part | Form 146? |
|---|---|---|
| Taxable remittances up to and including Rs 5 lakh in the tax year | A | No |
| Taxable remittances above Rs 5 lakh, with the relevant assessing-officer certificate/order | B | No |
| Taxable remittances above Rs 5 lakh, without that order | C | Yes, obtain it first |
| Not chargeable to Indian tax | D, unless Rule 220(3) excludes the payment | No |
The Rs 5 lakh line is a reporting distinction, not a TDS exemption. Non-chargeable payments covered by Rule 220(3), including specified remittance purposes and qualifying individual remittances without RBI approval, need no Form 145. Check the exemption against the actual transfer. Rule 220 attaches to a payment to a non-resident, not only to money leaving India, so a rupee credit to the payee's NRO account sits inside its wording; whether the bank asks for the form on a domestic transfer is a separate, practical question, and the tenant page treats the NRO-credit case as the grey area it is.
What the NRI must give you for treaty relief
Before applying relief, collect the residence country's TRC covering the payment period, filed Form 41, formerly Form 10F, PAN or applicable alternative identification, and the contract. Record beneficial ownership and any Indian permanent establishment, fixed base or visits relevant to the article. A TRC alone does not classify an invoice.
| India-UK treaty provision | What to check |
|---|---|
| Article 13 technical services | Its defined scope, including making technical capability available or transferring a technical plan/design; qualifying Article 13(4)(a)/(c) income has a 15% cap |
| Article 15 independent professional services | An individual freelancer's work may fall here and be outside Article 13; check Indian performance, presence and fixed base |
| Article 12 interest | Generally a 15% cap for a UK-resident beneficial owner; bank and connected-establishment exceptions need separate treatment |
For work performed wholly in the UK by an individual professional with no Indian fixed base or presence, Article 15 can remove Indian tax. Ordinary design work is not automatically Article 13 technical services. Apply the treaty rate only after checking eligibility; the treaty cap includes Indian surcharge and cess.
A worked example: Ravi in Hyderabad
Ravi's start-up owes UK-resident individual designer Maya Rs 6 lakh in FY 2026-27. Assume engineering-design consultancy qualifying for domestic 20% treatment, performed wholly in the UK, no royalty, no Indian fixed base or visits, valid PAN and no surcharge.
| Evidence before payment | TDS | Net to Maya |
|---|---|---|
| No TRC/Form 41; domestic treatment | Rs 1,24,800 at 20.8% including cess | Rs 4,75,200 |
| TRC, Form 41 and facts supporting Article 15 | Nil | Rs 6 lakh |
The first outward remittance uses Part C plus Form 146; the treaty-exempt one uses Part D unless excluded. If a different contract genuinely falls in Article 13 at 15%, TDS would be Rs 90,000, not the Article 15 result.
Separately, Ravi personally repays his UK-resident NRI uncle's Rs 20 lakh rupee loan with a full year's 8% interest: Rs 1,60,000. Principal TDS is nil. Without treaty relief, interest TDS is Rs 49,920 at 31.2%, leaving Rs 21,10,080 total to the uncle. With Article 12 eligibility, TRC and Form 41, TDS is Rs 24,000, leaving Rs 21,36,000. Assume arm's-length interest and no surcharge. Repay this non-repatriable rupee loan into the uncle's NRO account, not directly overseas.
The two mistakes to catch before payment
Paying gross and sorting it out later: the deduction point may already have occurred when the invoice or interest was credited. A later TRC or return filing does not automatically repair the payer's missed deduction. If you agree to bear the recipient's tax, a net-of-tax contract can also require grossing up.
Treating the whole loan repayment as taxable: identify principal and interest separately in the loan schedule and bank narration. A genuine principal repayment has no income component; do not deduct on Rs 20 lakh merely because the lender is NRI.
Check the loan's permitted funding and repayment route separately from its TDS. The family-loan page covers the FEMA side. A lender's request for an overseas payment does not change a rupee loan's non-repatriable terms.