14 August 2010
Whether interest on Time Deposit made with banks by Non Resident, mandatory liable to deduct tax at source at 30% ? Is there any way to keep away such deduction ? Even income of non resident is not exceeding maximum amount not chargeable to tax. Bank is straight away deducting 30 % tax
14 August 2010
If the person is from indian origin then the Non resident can open account as NRE a/c and the interest will be exempt u/s 10(4)(ii)
10(4)(ii) in the case of an individual, any income by way of interest on moneys standing to his credit in a Non-Resident (External) Account in any bank in India in accordance with the Foreign Exchange Regulation Act, 1973 (46 of 1973), and the rules made thereunder :
Provided that such individual is a person resident outside India as defined in clause (q) of section 282 of the said Act or is a person who has been permitted by the Reserve Bank of India to maintain the aforesaid Account ;]]
14 August 2010
But NRE a/c with banks have low interest rate. Client want to retain money in Time Deposits (FDs)with banks and his annual income does not exceed basic limit. Then what should be done to stop TDS @ 30%.
14 August 2010
NRE - FD could be made? Then TDS would not be deducted.
If the above cannot be done then TDS will be deducted @ 30.9% on the interest.
See the interest effect also along with TDS.
So if interest on FD is 6% and TDS deducted 30% then effective interest is 4.2% whereas the interest in NRE would be aroung 4%. So in effect the same interest rate is only applicable in both the forms.
You can file the return of the NRI and claim refund of TDS deducted if income is below exemption limit.
14 August 2010
Yes I am doing same but there is complexity in getting refund for NRI. Rather, i want to stop TDS on interest on proof that income is below basic limit.
CAclubindia
