Section 195 — TDS under a DTAA on Indian payments: is this a do-it-yourself job?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: the rate comes from the Act or the treaty, whichever is more favourable, and the treaty rate requires the recipient's residency certificate and declaration.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Can the payer apply the DTAA rate instead of the domestic one?
Yes, where the treaty rate is the more beneficial one and the recipient has put the payer in a position to rely on it. In practice that means a tax residency certificate from the recipient's own authority, the declaration India requires alongside it, and — where the treaty demands it — evidence that the recipient is the beneficial owner rather than a conduit. Without those, the payer withholds at the domestic rate under section 195 and the recipient is left recovering the difference by filing. The DTAA in force between India and the recipient's country is what sets the rate, so the analysis starts with which treaty applies.
What is a tax treaty?
A bilateral agreement that allocates taxing rights between two countries so the same income is not taxed twice without relief. It decides which country may tax each income type, caps withholding rates at source, and supplies a tie-breaker when both countries consider you resident. A treaty does not reduce tax automatically — you claim its benefit on a return, a withholding form or a residency certificate. Tax treaty vs domestic law shows how the two interact.
Is double taxation illegal?
It is legal. Two countries can each have a valid claim on the same income — one because the income arose there, the other because you live there — and nothing prohibits both from exercising it. What exists instead is relief: tax treaties allocate the claim, and domestic law gives a credit for foreign tax paid. The relief is not automatic, though. It is claimed on a return, and unclaimed relief is simply lost. See how double taxation is relieved.
I have not filed for several years while living abroad — what are my options?
Both countries have routes back, and using one before they contact you is what preserves the relief. On the US side there are procedures aimed at taxpayers whose failure was not wilful, including one designed for people living outside the country, and separate procedures for late account reports and information returns alone. Canada has its voluntary disclosures programme and taxpayer relief for penalties and interest. Filing quietly and hoping is the one approach with no protection attached to it. See catch-up filing.
What happens after the filing?
You get the filed copies and a note of anything due next year, with the dates. Where an authority responds, that correspondence comes to us if the authorisation is in place.
