Persons responsible for deducting TDS
Any person responsible for paying to a non-resident, not being a company or to a foreign company, any interest (other than under section 194LB,194LC or 194LD) or any sum chargeable to tax other than salary.
If the payment made is in the nature of salary then TDS to be deducted under section 192 and not under this section.
However if interest is payable by the government or public sector bank or a public financial institution deduction of tax shall be made only at the time of payment.
Resident but Not Ordinarily Resident (NOR) is not covered under this section.
Rate of TDS
There is no threshold limit. It means that tax is required to be deducted irrespective of amount of payment.
The rate of TDS is the rates which is in force under chapter. Incase payee not having valid PAN, then TDS rate as per rate prescribed chapter XVIIB or 20% whichever is higher will apply. However DTAA provisions are also to be considered. If there is Double Tax Avoidance Agreement (DTAA) between India and country of residence of payee then such provisions will apply.
TDS amount is to be increased by surcharge if the payment is made to a foreign company exceeding rs. 1 crore. EC and SHEC are to be added to the amount of TDS in case payment is made to a non-resident or a foreign company.
Assessee can apply to assessing officer for no TDS or TDS at lower rate under Section 197.
Point of Deduction
TDS is required to be deducted at the time of credit of such sum to the account of payee or at the time of payment whichever is earlier, is required to deduct income tax thereon.