Tax deducted at source, withholding and gross-up, clause set

7B. DEDUCTION OF TAX AT SOURCE

7B.1 Deduction. The Customer shall deduct tax at source from the Charges at the rate and under the provision required by Applicable Law at the time of payment or credit, whichever is earlier, and shall deposit it with the Central Government within the prescribed time. The Parties record that, on the Effective Date and on the facts known to them, deduction is expected to be made under s.[194J] of the Income-tax Act 1961 at the rate of [TDS rate (%)]%, on the basis that the Services are [professional services / technical services / a works contract / rent of plant and machinery]. the rate in force. This record does not bind either Party as against any Governmental Authority.

7B.2 Net payment and no gross-up. An amount deducted and deposited under clause 7B.1 is treated as paid to the Supplier in satisfaction of the corresponding part of the Charges. The Customer is not required to gross up any payment on account of tax deducted at source from a payment to a resident, the Supplier being entitled to credit for the tax so deducted.