Can You Prevent TDS on Payments To Non Resident?

Yes, there is a  way to prevent TDS on the payment to Non Resident. It may be partial or full . The provision regarding relief from tax at source is provided in the same provision i.e section 195 of the I T Act. The scope is given under subsection 195(2) which  states that if the deductor feels that the whole amount being paid to non resident may not chargeable to tax , he/she/it can make application for appropriate  relief ot Assessing Officer.

Procedure

As per I T Rule 29(2) , following conditions must be satisfied before Deductor makes an application to Assessing Officer

(i) the person (the payee)  concerned has been regularly assessed to income-tax in India and has furnished the returns of income for all assessment years for which such returns became due on or before the date on which the application under sub-rule (1) is made;

(ii) the person (the payee) is not in default or deemed to be in default in respect of any tax (including advance tax and tax payable under section 140A), interest, penalty, fine, or any other sum payable under the Act;

(iii) the person (the payee) has not been subjected to penalty under clause (iii) of sub-section (1) of section 271;

(iv) he has been carrying on business or profession in India continuously for a period of not less than five years immediately preceding the date of the application, and

(v) the value of the fixed assets in India of such business or profession as shown in his books for the previous year which ended immediately before the date of the application or, where the accounts in respect of such previous year have not been made up before the said date, the previous year immediately preceding that year, exceeds fifty lakhs of rupees.

Prescribed Form

If aforesaid conditions are fulfilled then , the payer can file an application in Form No. 15D with his Assessing Officer or TDS wing of the department as the case may be .The Form 15D can be downloaded from here.