Tax deducted at source (also known as TDS) is the concept of us - Ready Pattern paying the taxes while making payment to you. This means we pay the taxes on your earnings to the Indian government which can be set off against your final tax payable to your country government. Indian gvernment has a treaty with almost all countries world wide allowing you to set back the taxes paid by us.
Some facts to be kept in mind before reading the complete document:
- You dont have to go to your government to collect taxes paid by us in India.
- You dont have to explain to any goverment official.
- You dont have to make any additional payments
- You have to reduce the final tax which has to be paid by you at the end of the year
Suppose if we have this situation
- Ready Pattern pays TDS worth USD $300 over the entire year for you.
- You have to pay USD $5000 as taxes to your government at the end of the year
- You pay USD $5000 - USD $300 = USD $4,700 to your goverment.
In practice only this has to be done from your end.
While deducting the taxes from your final payments, you have to provide a document stating that Ready Pattern has paid the taxes on behalf of you in India. These documents are known as TDS documents. You must keep a copy of these documents. The document provided by us is sent via email while making the payment to you.
India has a Double taxation treaty with the following countries:
The deductions of TDS are 20% flat each time a payment is issues to you. The deductions are mentioned on the following page where the bylaways of each country has been mentioned.
You have not lost your payment. We have only paid the taxes on your behalf. At the end of the year you have to pay lesser taxes to your government.
The taxes deducted will not be paid to you, however with the TDS document provided by us, you will get a valid claim when you file your taxes in your country. This has been implemented by most countries across the world to prevend fraud activities.