Awadhesh Ranjan

large_Gemini_Generated_Image_bb9tn9bb9tn9bb9t-fotor-20260319165920 (1).jpg

medium_Gemini_Generated_Image_bb9tn9bb9tn9bb9t-fotor-20260319165920 (1).jpg

small_Gemini_Generated_Image_bb9tn9bb9tn9bb9t-fotor-20260319165920 (1).jpg

thumbnail_Gemini_Generated_Image_bb9tn9bb9tn9bb9t-fotor-20260319165920 (1).jpg

Gemini_Generated_Image_bb9tn9bb9tn9bb9t-fotor-20260319165920 (1).jpg

An ICEGATE error code is a system-generated alphanumeric response from the Indian Customs Electronic Gateway (ICEGATE) that indicates a failure in data validation. These codes appear when the information you file, such as in a Shipping Bill, EGM, or Bill of Entry, conflicts with records held by the GSTN, DGFT, RBI, or the customs department.

These codes are not notifications; they represent hard blocks in the Indian Customs EDI System (ICES). For example, if you file a Bill of Entry but the currency code does not match the RBI standard, the system rejects the filing immediately. Processing resumes only after you fix the error.

<a></a>What are the Common Reasons for ICEGATE Errors?

The following common reasons for ICEGATE errors will guide you to be more careful while filing documents on ICEGATE or help you understand why an error has come up.

<a></a>What Are the Most Common ICEGATE Error Codes in India?

The customs system categorizes errors based on whether they relate to your filing type, your technical environment, or the network sync between different government departments.

These errors specifically target the accuracy of the trade documents submitted by the exporter or importer.

<a></a>Shipping Bill (SB) &amp; IGST Refund Errors

<a></a>Technical Portal &amp; Setup Type Errors

These errors relate to the hardware and software configuration used to access the customs portal.

<a></a>System &amp; Inter-Agency Network Type Errors

These blocks occur when data cannot move correctly between different government systems.

<a></a>How Do You Fix ICEGATE IGST Refund Errors (SB001 to SB006)?

Compare your GST filings with your custom records to resolve IGST refund errors. Most of these fixes involve using the amendment tools provided on the GST portal or coordinating with your shipping line.

<a></a>How Do You Fix AD Code Registration Error 110?

Error 110 occurs when the system detects that your Importer-Exporter Code (IEC) is already linked or registered at a different location.

To fix AD Code Registration Error 110, follow these five steps:

If you encounter technical blocks during this process, raise a ticket with the <a href="https://www.icegate.gov.in/guidelines/helpdesk">ICEGATE Helpdesk</a>.

<a></a>How Do You Fix Bill of Entry (BOE) Submission Errors?

Fixing BOE errors occurs when physical shipping documents and the electronic data on ICEGATE do not match.

Here’s how your workflow should look to fix a bill of entry error:

For clerical errors in product classification, file an amendment under Section 149 of the Customs Act.

<a></a>How Do You Fix Shipping Bill Submission Errors?

Exporters mostly face shipping bill errors because of typographical mistakes or technical failures during the digital signing process.

Technical blocks at the signing stage, such as DSC upload failures, can be solved by using a compatible browser like Mozilla Firefox ESR or Edge in Internet Explorer Mode. Ensure you are using Java Runtime Environment 8 (JRE 1.8) and have added the portal to the Java Security Exception Site List.

If you face port registration or mapping failures, consult the official ICEGATE Port Code List to ensure accuracy. For clerical errors related to HSN codes, file an official amendment under Section 149 of the Customs Act using the ICEGATE Web Forms.

<a></a>How Do You Fix EGM and IGM Error Codes?

Errors in manifests block the generation of IGST refunds and the creation of RoDTEP/RoSCTL scrolls. These issues must be handled through the carrier or a Customs House Agent(CHA).

<a></a>EGM (Export General Manifest) Errors

<a></a>IGM (Import General Manifest) Errors

For any amendments, your Customs Broker must use the Bill of Entry Amendment webform or the specific SEA/AIR IGM webforms while logged in with a valid Class III DSC.

The Sea Cargo Manifest and Transhipment Regulations (SCMTR) require precise profile data and document formatting.

For rectification, make the data corrections and click Submit/Resubmit to re-validate the data against the ICES system. For specific payload-level errors like codes 264 or 284, refer to the official SCMTR Error Codes PDF provided by customs.

The <a href="https://www.skydo.com/blog/idpms-import-data-processing-and-monitoring-system">Import Data Processing and Monitoring System (IDPMS)</a> flags mismatches between customs data and your Authorized Dealer (AD) bank records. These errors are split into two categories:

To find the exact reason for a rejection:

If the error relates to a PAN or registration mismatch, ensure your PAN, AD Code, and IEC details are identical across both the DGFT and ICEGATE databases. For incorrect port codes, log an amendment request using the BE Correction Role on the portal.

For any escalation, reach out to the ICEGATE helpdesk at 1800-3010-1000 or <a href="mailto:icegatehelpdesk@icegate.gov.in">icegatehelpdesk@icegate.gov.in</a>, for RBI-side issues, contact the designated regional RBI/EDPMS support desk.

<a></a>How Do You Contact ICEGATE Helpdesk for Unresolved Errors?

If automated fixes and portal amendments do not resolve an error, you must contact the technical support team:

IGST refunds (SB001–SB006) directly delay your export payments, and strains your business cash flow. An unplanned expense can set your production schedule back by weeks.

While customs compliance happens on the government portal, Skydo provides the financial infrastructure to ensure your international payments remain predictable.

<a href="https://www.skydo.com/">Skydo</a> helps Indian exporters receive international payments from clients in USD, EUR, GBP, and other major currencies with zero forex markup. This removes the hidden costs associated with traditional banking.

Our flat-fee pricing model is fully transparent:

Every time you receive an international payment, an automated, free FIRC (Foreign Inward Remittance Certificate) is generated. An FIRC is crucial for customs compliance and to resolve data gaps in IDPMS or EDPMS records. By providing real-time payment tracking, Skydo gives you direct visibility into your finances.

large_icegate-error-codes-cover.webp

medium_icegate-error-codes-cover.webp

small_icegate-error-codes-cover.webp

thumbnail_icegate-error-codes-cover.webp

icegate-error-codes-cover.webp

Customs clearance is the mandatory official process of getting permission for goods to enter or leave India. The process starts when you file a bill of entry for imports or a shipping bill for exports on the ICEGATE portal.

It includes the cargo value, origin, HSN classification, and destination of the products. If a shipment does not meet the legal rules, customs authorities hold the goods for physical checks until they get the missing information.

A Customs House Agent (CHA) often manages the tasks of submitting the declaration in the correct format and paying the applicable taxes and duties.

<a></a>Why Is Customs Clearance Required?

Other than being a legal requirement for all commercial shipments crossing international borders, ‌customs clearance is required because:

<a></a>What Is the Custom Clearance Process for Indian Exporters?

While exporters are legally responsible for customs compliance, most businesses appoint a Customs Broker (CHA) to handle document filing and storage. As most of India’s trade is digitized and routed through the Indian Customs EDI System (ICES), the CHA plays an essential role in precise electronic filing and storage through the ICEGATE and e-Sanchit portals, respectively.

Here is what the customs clearance process looks like for Indian exporters:

<a></a>What Is the Custom Clearance Process for Indian Importers?

Most importers hire a Customs Broker (CHA) to handle the technical filing on the ICES system. Here’s what the customs clearance process looks like:

<a></a>Pre-Arrival: Registration and Documents

<a></a>Examination Channels and Final Release

<a></a>What Documents Are Required for Customs Clearance in India?

The document list for customs clearance differs for an exporter and an importer. We have classified the entire document list for exporting and importing goods in India:

<a></a>What Are the Different Customs Clearance Fees in India?

Customs duties are not fixed in India. They are calculated based on the declaration value of the goods and the HSN classification

<a></a>Detailed Dashboard Tracking (Registered Users)

Follow these steps to check bill of entry status on ICEGATE if you’re a registered user:

1. Log-in to the ICEGATE portal using your credentials

2. Locate Bill of Entry - Job Status on the dashboard

3. Click on Detailed Status to download an Excel file with shipment statuses.

For registered users, the dashboard view gives a more granular, real-time status than the public enquiry route.

<a></a>How Long Does Customs Clearance Take in India?

The timeline for customs clearance in India depends on several factors, including the nature of the goods, the completeness of your documentation, port congestion, and the specific mode of transport.

<a></a>What Are the Common Reasons Shipments Get Stuck at Customs?

Even a minor error can lead to significant delays. Based on regulatory standards and the technical framework of Indian trade, these are the most frequent causes for shipments being stalled

Paperwork Errors and Data Mismatches: Incomplete paperwork or minor typos, such as incorrect HS codes or vague product descriptions, cause immediate holds. For example, using a broad term like electronics instead of a specific description.

Undervaluation or Overvaluation: Customs officers verify declared values. If they are suspiciously low or abnormally high values they may start a formal reassessment and ask for supporting proof like bank statements or wire transfers.

Unpaid Duties and Taxes: A shipment will not receive its Out-of-Charge (OOC) order until you pay all the assessed duties and taxes in full.

Missing Licenses or Permits: Regulated goods, including electronics, pharmaceuticals, chemicals, and food, require specialized agency approvals. If these are missing upon arrival, the shipment is held until the correct certificates are produced

Prohibited or Restricted Items: Goods that are banned in India or hazardous materials that cannot meet safety standards are stopped by custom authorities

Random or Risk-Based Inspections: The automated Risk Management System (RMS) selects shipments for physical inspection based on profiling, which can cause some delay

Missing or Invalid Consignee Information (KYC): Without valid Know Your Customer documentation to the logistics carrier, your export could remain stuck for days.

Incorrect HS Code Classification: Using a vague or incorrect 8-digit HSN code automatically flags a shipment for audit, duty recalculation, and potential penalties

<a></a>How to Avoid Delays in Customs Clearance?

You can prevent most of the delays in customs clearance by just being proactive. Follow these industry best practices to minimize the risk of cargo holds and additional port costs:

Get documentation right before dispatch: Ensure that the commercial invoice, packing list, and certificate of origin match each other exactly in terms of weight, quantity, and value. Any discrepancy will cause automated system flags and physical inspections.

Use specific product descriptions: Avoid vague terms like “electronics,” “samples,” or “gift”. Instead, provide technical and detailed descriptions to allow customs officers determine the correct assessment.

Declare accurate values: Never undervalue your goods; customs authorities verify declared values with global databases and actual purchase receipts. Intentional or accidental misevaluation results in severe penalties, cargo seizure, or prolonged valuation disputes.

Use correct HS codes: Identify the right 8-digit HSN code for your product for correct duty calculation. Verify codes using the Indian Customs Compliance Information Portal (CIP).

Secure permits before shipping: Get necessary No-Objection Certificates (NOCs) from agencies like FSSAI or BIS before the shipment arrives.

Clarify duty responsibility upfront (Incoterms): State agreed Incoterms (e.g., DDP vs. EXW) on all shipping documents. This ensures both customs and the logistics provider know exactly which party settles duties.

Provide complete contact details: Include accurate names, full addresses, and active phone numbers for both the sender and the consignee.

Use ICEGATE for digital filing: Use e-Sanchit repository for paperless document submission. It reduces manual data-entry errors and speeds up the assessment cycle.

Engage a licensed Customs House Agent (CHA): A CHA is an expert in handling local regulations and resolving classification disputes.

Getting customs clearance solves only half of the challenge for Indian exporters. They still have to find a way to get paid from their international clients without losing money to hidden forex charges or bank delays.

Skydo solves both the problems as it is a specialized payment platform made for Indian goods and service exporters. You get paid from your foreign clients on time, and directly into your bank accounts. Here’s how:

Flat fees: Skydo charges a flat fee, $19 for transactions under $2,000; $29 for $2,000–$10,000; 0.3% for transactions above $10,000. No hidden forex markup or any other extra charges

Free virtual accounts in multiple currencies: Create virtual accounts in USD, EUR, GBP, SGD, AUD, CAD + International SWIFT at free of cost. Your clients pay you locally in their currency, and the payments get settled to your bank account in INR.

Free FIRC for every transaction: Skydo issues a free FIRC every time you receive an international payment. This is an important compliance document to prove you have received international payment in India.

Fully digital, no manual follow-up: No RM calls, no chasing SWIFT copies, you get real-time visibility into payment status from the Skydo dashboard.

Quick setup: Account setup takes 10–15 minutes and there is no monthly fees.

large_custom-clearance-cover.webp

medium_custom-clearance-cover.webp

small_custom-clearance-cover.webp

thumbnail_custom-clearance-cover.webp

custom-clearance-cover.webp

An export license is an official government permission required to ship certain categories of goods to specific countries. To export items or products that are considered ‘restricted’ as per the foreign trade policy, you must obtain this license from the Directorate General of Foreign Trade (DGFT).

The Indian government requires export licences for certain goods. This is to protect national security, preserve cultural and environmental resources, and comply with international trade obligations. This system also helps authorities monitor the movement of sensitive or regulated products across borders and prevents their misuse.

For products of the freely exportable category, an exporter does not need an export license. Exporting such goods needs only an IEC, i.e. a universal 10-digit alphanumeric code.

<a></a>What Are the Types of Export Licenses?

There are different types of export licences in India. Based on the nature of the goods, their end use, and the applicable export regulations, different licenses apply. The main types of export licences include:

Unlike an IEC, which every exporter must obtain, an exporter needs an Individual Licence only for certain products. For example, an exporter may require an Individual Licence to export a restricted chemical or controlled technology to a specific buyer in another country.

<a></a>Open General Export License (OGEL)

It is a specialised license to export defence-related equipment to overseas countries that are eligible to receive such shipments. OGEL allows exporters to make multiple exports of specified items without requiring a separate licence for each shipment. However, as an exporter, you must satisfy the eligibility, reporting, and other requirements. Managed by the Department of Defence Production

SCOMET stands for Special Chemicals, Organisms, Materials, Equipment and Technologies. Exporters need this license to export special chemicals, organisms, etc., that fall under the dual-use item category, that is, when it could qualify for both military and civil use. These include cryptographic software and even nuclear materials. Its approval considers factors like the destination country, end user, intended use of the product, etc.

Depending on the category of item you are exporting, you may need to submit technical specifications and end-use certificates.

As its name implies, exporters need this to export items listed as restricted. Such a category includes exporting live animals, silkworms, sandalwood, etc. You get this license only after the relevant authority reviews the export request and its compliance. Approval may be subject to restrictions on quantity, destination country, validity period and other factors.

<a></a>What Documents Are Required for an Export License?

Document requirements vary by licence type. The DGFT issues export licences and requires basic business documents for the application process. However, specialised authorisations such as SCOMET and OGEL may require additional information, end-use certificates, and NOC:

Here’s a quick look at what you’ll need:

To export goods that require a licence, you must register your business as a private limited company, a partnership firm or a Limited Liability Partnership (LLP). You will need to submit proof of this registration.

You must complete the application for a license to export restricted items by submitting the ANF-2N and ANF-1 forms. Here, the ANF-1 captures the business and exporter details. While ANF-2N is the application form to seek authorisation for exporting any restricted goods. Both forms are prescribed and issued by the DGFT as part of the export licensing process.

You must also have a valid GST registration certificate and number to apply for this license. This 15-digit alphanumeric code serves as your digital identity as a business and helps keep track of your export and other business activities. Also, attach your business’s PAN card copy.

While applying for an export license, you must also attach the receipt of the fee you paid online for it. This fee typically varies by licence type, and exporters pay it online through the DGFT portal during the application process. For example, applications for restricted items or SCOMET export authorisations generally attract a fee of ₹1,000 per application.

To export restricted goods, attach an end-use or end-user certificate with the documents. This certificate confirms who will receive the goods and how they will use them. It helps authorities ensure they are not diverted for unauthorised purposes. You must attach an NOC from the owner if your business operates from a rental property.

How to Apply for an Export License on the DGFT Portal?

To apply for an export license, you need to visit the <a href="https://www.dgft.gov.in/">DGFT web portal</a> and complete the application process online by following the steps below.&nbsp;

However, these steps are for the ‘Restricted Exports’ category and they vary from other types of export license or authorisation you are applying for.

Step 1: Log in to the DGFT portal.&nbsp;

+7hw2kAAAAGSURBVAMADp+iXF4eICQAAAAASUVORK5CYII=

Step 2: Go to Services → Export Management System → Restricted Exports.

mBeJ1AAAAAZJREFUAwClNhssd9+8AgAAAABJRU5ErkJggg==

JpX9CAAAABklEQVQDAB1NKjQijMIiAAAAAElFTkSuQmCC

Step 3: Select ‘Apply for Restricted Exports’ and click ‘Start Fresh Application’ or continue a saved draft if available.

0UJOHsAAAAGSURBVAMAzkF0h2knv90AAAAASUVORK5CYII=

Step 4: Enter the basic export/authorisation details as required by the system. Once done, keep clicking on the ‘Save &amp; Next’ button to reach the other details page.&nbsp;

Step 5: Attach all mandatory documents (as per item/category requirements) in the prescribed format.

Step 6: Once you have uploaded the documents, click on the ‘Save &amp; Next’ button to reach the declaration page. Select the terms and conditions check box to accept them.&nbsp;

Step 7: A draft of the application will be created and you will reach the ‘Application Summary’ screen. Click on the ‘Print Summary’ button.&nbsp;

Step 8: Proceed to make payment for the application.

vrWHdAAAABklEQVQDABC9KFlkFxZIAAAAAElFTkSuQmCC

Step 9: After successful payment, you will be redirected to the DGFT portal, where the receipt is displayed and can be downloaded or printed. A confirmation is also sent via email and SMS acknowledging the file submission.

80v5VAAAAAGSURBVAMAoScWbVEs7VkAAAAASUVORK5CYII=

<a></a>How Much Does an Export License Cost in India?

The cost of an export license in India is not fixed and depends on the type of license you apply for and how you choose to complete the process.

Here’s a breakdown to help you understand the overall expenses involved:

Cost Comparison Between DIY Application and Hiring a CA

Comparison Between the Channels of Export License Application

<a></a>What Goods Require an Export License?

Several categories of regulated goods need an export licence. These include SCOMET items, defence-related products, wildlife derivatives, antiquities, and more:

Note: Most general merchandise, software and IT services qualify as freely exportable and require only a valid IEC.

<a></a>What is the Validity of an Export License?

The export licence validity varies by type. For example, an IEC has lifetime validity, but is subject to annual updates. Advance Authorisation and DFIA generally have a validity of 12 to 24 months. EPCG has a 6-year export obligation period. While a SCOMET export licence may be issued for a specific consignment or for up to 24 months.

Note that the DGFT allows exporters to reapply for a licence to export within 6 months and up to 12 months from the expiry of its validity.

As an exporter, you must apply before expiry through the DGFT portal, providing justification and the required documents. The authority approves an extension based on compliance. However, the <a href="https://www.skydo.com/blog/iec-code-registration">IEC registration</a> has lifetime validity.

How Does Skydo Help After You Get Your Export License?

As you get your export license, you can move to AD bank registration, invoicing, and receiving international payments. However, exporters often lose 3 to 5% per transaction due to bank, forex markups and other charges.

Platforms like Skydo offer competitive forex rates with transparent pricing. You pay $19 for transactions up to $2,000, $29 for transfers between $2,001 and $10,000, and 0.3% for amounts above $10,000. GST is charged additionally.

Skydo also provides compliance documentation and an instant FIRA while simplifying the payment workflow. This allows exporters to focus on business instead of paperwork.

For exporters looking to simplify cross-border payments and compliance, Skydo offers transparent fees and a streamlined payment experience!

large_export-license-cover.webp

medium_export-license-cover.webp

small_export-license-cover.webp

thumbnail_export-license-cover.webp

export-license-cover.webp

What Is TDS on Foreign Payments Under Section 195?

TDS on foreign payments is tax that an Indian payer must deduct at source under Section 195 of the Income Tax Act, 1961, when making a payment to a non-resident or foreign company if the payment is chargeable to tax in India. The payer must deduct tax at the applicable rate when the amount is credited to the recipient's account or paid, whichever occurs first.

The obligation rests with the person making the payment, whether an individual, Hindu Undivided Family (HUF), firm, Limited Liability Partnership (LLP), company, or government body. For example, if an Indian advertising firm pays ₹12 lakh to a US-based digital marketing agency for services taxable in India, it must deduct TDS at the applicable rate before remitting the balance. The actual rate depends on the nature of the payment and applicable tax provisions, including any relevant tax treaty.

Does TDS Apply When You Receive Foreign Payments in India?

No. Section 195 of the Income Tax Act, 1961, governed tax deduction at source (TDS) on payments made by Indian residents to non-residents when the income was chargeable to tax in India. It did not apply merely because an Indian freelancer or exporter received payment from a foreign client. The direction of payment matters, i.e., Section 195 covered qualifying payments to non-residents, not incoming payments from overseas clients.

For transactions from 1 April 2026, the corresponding withholding provisions are covered under Section 393 of the Income-tax Act, 2025.

However, Indian businesses making payments to foreign vendors must assess whether the payment is taxable in India before determining their TDS obligations.

Before making payments to foreign vendors, Indian businesses should assess the nature of the income, its taxability, and any applicable treaty benefits. A Tax Residency Certificate (TRC) and a no-PE declaration may support a claim for treaty benefits where relevant, but neither document automatically eliminates a TDS obligation.

Which Payments Attract TDS Under Section 195?

Payments to non-residents that are chargeable to tax in India may attract TDS under Section 195 of the Income Tax Act, 1961. These include interest, dividends, royalties, fees for technical services, professional fees, commission, brokerage, and taxable capital gains. For payments from 1 April 2026, the corresponding withholding provisions fall under Section 393 of the Income-tax Act, 2025.

The following factors determine whether TDS applies:

For property sold by an NRI, the applicable withholding depends on the nature of the gains and the relevant tax provisions. For transfers on or after 23 July 2024, the long-term capital gains rate is generally 12.5% for property held for more than 24 months. Short-term gains are subject to the applicable rate. The buyer must determine the correct withholding amount, including applicable surcharge and cess.

Not every payment to a foreign vendor attracts TDS. Payments for imported goods may fall outside the withholding requirement if the transaction does not generate income taxable in India. Similarly, a foreign vendor's business income may not be taxable in India if the vendor has no permanent establishment (PE) here and the applicable tax treaty supports that treatment. A Tax Residency Certificate (TRC) and a no-PE declaration may support a treaty claim, but do not automatically exempt a payment from TDS.

Software and cloud-service payments require particular care. In Engineering Analysis Centre of Excellence Ltd. v. CIT (2021), the Supreme Court held that payments for certain standardised software did not qualify as royalties under the relevant provisions and tax treaties. However, cloud services, SaaS subscriptions, and licensing arrangements may receive different tax treatment depending on the rights granted and contract terms. Consult a chartered accountant if the classification is unclear.

TDS is generally deducted when the payment is credited to the non-resident's account or paid, whichever occurs first. The obligation can apply to individuals, Hindu Undivided Families (HUFs), firms, Limited Liability Partnerships (LLPs), companies, and government bodies making qualifying payments.

Related Reading: <a href="https://www.skydo.com/blog/fema-foreign-exchange-management-act">Foreign Exchange Management Act (FEMA)</a>.

What Are the TDS Rates on Foreign Payments?

There is no single <a href="https://www.skydo.com/blog/minimise-tds-foreign-payments">TDS rate for foreign payments.</a> The applicable rate depends on the type of income, the recipient's tax status, and whether India has a Double Taxation Avoidance Agreement (DTAA) with the recipient's country. Where permitted, the payer generally applies the more beneficial rate under Indian tax law or the applicable DTAA, subject to the treaty's conditions and documentation requirements.

<a></a>TDS Rates on Different Foreign Payments

The following table provides indicative rates under Indian domestic tax law and examples of treaty rates. Actual rates depend on the transaction, the recipient's status, and the applicable treaty.

Note: These are indicative rates, not a substitute for checking the specific provision and treaty. Domestic rates may also vary according to the type of income. Applicable surcharge and cess must be considered when using domestic rates. Where a DTAA caps the tax rate, the treaty provisions and eligibility requirements determine the applicable rate.

The domestic rate of 20% can increase when applicable surcharge and the 4% health and education cess are added. Where a beneficial treaty rate applies, the tax generally cannot exceed the treaty's applicable limit, subject to the treaty's terms and eligibility requirements.

If the foreign recipient does not provide a Permanent Account Number (PAN), a higher withholding rate may apply under the applicable provisions. Under Section 206AA of the Income Tax Act, 1961, the general rule is to deduct tax at the highest of the applicable rates, including 20%, subject to exceptions for certain non-residents and prescribed circumstances.

Under Section 195A of the Income Tax Act, 1961, grossing up applies when the payer agrees to bear the tax on behalf of the non-resident and the recipient is entitled to receive a fixed net amount.

For example, if a foreign contractor must receive ₹1,00,000 after TDS at 15%, the gross amount is calculated as:

Gross amount = ₹1,00,000 ÷ (1 − 0.15) = ₹1,17,647

The payer must therefore deposit approximately ₹17,647 as TDS, while the contractor receives ₹1,00,000. The payer's total cost is approximately ₹1,17,647.

How Can You Claim Lower TDS Rates Under DTAA?

You can claim lower Tax Deducted at Source (TDS) rates under a Double Taxation Avoidance Agreement (DTAA) by verifying your foreign vendor's tax residency, collecting the required documents and applying the relevant treaty provisions before making the payment. Follow these four steps to determine whether your payment qualifies for a lower rate.

You must also complete the applicable withholding, tax deposit and remittance reporting requirements. Under India's tax framework effective from 1 April 2026, Forms 145 and 146 replace the earlier Forms 15CA and 15CB, respectively. The applicable reporting route depends on the nature and amount of the remittance and the prescribed conditions. A certificate from a chartered accountant may be required in specified cases.