The 60-second version
Section 196J requires deductor to withhold 10% on fees for technical services or 20% on royalty paid to non-resident — DTAA may reduce with Form 67 and TRC.
Section 196J splits FTS at 10% and royalty at 20% for non-resident payees
Section 196J applies when Indian resident pays fees for technical services (FTS) or royalty to non-resident — 10% and 20% respectively unless DTAA lower.
Returning NRIs hiring foreign consultants, SaaS vendors, or IP licensors must deduct before SWIFT and file Form 15CA/15CB.
General NR lane: Section 195 guide for other payments to non-residents.
Section 196J rates
| Payment | Rate | DTAA |
|---|---|---|
| FTS | 10% | Often 15% cap |
| Royalty | 20% | Often 10-15% |
| Brokerage | 196H 5% | Separate section |
| Salary | 192 | Resident only |
Section 196J compliance
Classify
FTS vs royalty.
DTAA check
Articles 12/13.
Deduct TDS
10% or 20%.
Form 15CB
CA certificate.
Form 26Q
Quarterly return.
Flow
Section 196J kit
- Invoice.
- Payee TRC.
- TDS challan.
- Form 15CA/15CB.
- Contract classification memo.
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FTS vs royalty
Misclassification triggers 200% penalty under Section 271 — get CA memo before first payment.
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vs Section 195?
196J is specific FTS/royalty; 195 covers other NR payments.
vs Section 196H?
196H is brokerage commission at 5%; 196J is FTS/royalty.
DTAA FTS?
India-US DTAA Article 12 often caps FTS at 15%.
SaaS subscription?
Often royalty or FTS — classify with CA before deducting.
Form 15CB?
Mandatory for remittance to NR consultant.
GST overlap?
Import of services may need GST IGST — separate from 196J TDS.
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