03 August 2010
Rate is 30% Section is 195 If the depositor is a non resident of a country to which a double taxation avoidance agreement prevails, that rate, if less than 30 % ,can be adopted. But the DTAA rate if less than 20 %, the depositor has to give PAN card copy to the bank otherwise tax will be deucted @ 20% under section 206 AA. The authority for advance ruling in the year 2008 has decided in a case that tax need to be deducted only @ 20% on the interest on NRO fixed deposits on the view that the interest is generated from a foreigh exchange asset.
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