Deduction of tax at source under section 195 of the Income-tax Act, 1961, from payments to non-residents where tax is to be borne by the payer—Clarification regarding

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..... No. 370 Dated 3/10/1983 It has come to the notice of the Board that in certain cases where payments are made to non-residents and the tax payable by the non-resident is borne by the person making the payment, the provisions of section 195 of the I.T. Act, 1961, are not being followed. As a result such persons become liable to pay interest and penalty under section 201(1A) and section 221 respect .....

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..... y, the sum chargeable to tax in the hands of the non-resident recipient would be this grossed up amount and it is with reference to this grossed up amount that tax has to be deducted as required by the provisions of section 195. 3. Persons responsible for paying to a non-resident person, any sums which are stipulated to be paid net of taxes should carefully note that the calculation of tax to be .....

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