TDS

This query is : Resolved

vignesh (Querist)
Follow

31 May 2010 NRI sold a property in India.
Invested the proceeds in Central Govt. Bonds. Bonds matured. Reinvested in Fixed Deposit in a Comercial bank.

Whether the bank has to deduct TDS at the rate of 10% or 33.33%

E V SRI KRISHNA

E V SRI KRISHNA (Expert)
Follow

31 May 2010 10% rate is presumably u/s 194A, which is NOT applicable to the case, as the payee is NRI. Hence, the section governing the TDS is Section 195. As per Section 195, the TDS rate is 30.90% ( No Surcharge ). However, the payee can seek shelter under the relevant DOuble Taxation Avoidance Agreement ( DTAA ) basing on his residence. Such DTAA would normally prescribe a lesser rate of tax deduction, which will be beneficial to the payee.