Shall we get any exemption limit in TDS on payment to NRI i.e If I want to pay Contract amount of Rs only 5000 to NRI shall I need to deduct Tax? Is there any slab limit that on exceeding that amount I have need to deduct tax ?
16 Replies
A.K.Agrawal
(Investments & Finance)
(132 Points)
Replied 18 March 2011
In case of interest to a NRI what are TDS norms?
i.e. upto what limit TDS not reqd. to be deducted?
Rate of TDS above that limit?
Jainish shah
(assistant chartered accountant)
(191 Points)
Replied 21 March 2011
Kindly refer section 195 of the Act.
According to the provision of this section,
"Any person" responsible for paying to a non resident, not being a company, or to foreign company, any interest or any other sum chargeable under the provisions of this act except salary shall deduct tax thereon.
the word "Any person" includes persons not liable to 44AB as well as any other persons.
Hence, you have to deduct tax on any payment which is income of that such NRI except salary.
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7024 Points)
Replied 31 March 2011
I agree with Jainish , there is no thershold limit unlike sections 194A to 194L for not deducting TDS u/s 195.
even a single rupee payment is liable for tax deduction .Rate of TDS u/s 195 for interest is 20.6% provided FEMA regulations have been followed and the money has been received in foreign exchange.
A.K.Agrawal
(Investments & Finance)
(132 Points)
Replied 01 April 2011
1. I understand that sec.195 applies only for INCOMES ARISES OUT OF forex inward recd. for TDS & other treatments. But will the same treatment will have to be taken up for A NRI's INR fund left behind in India ? Nothing mentioned in chapter XII A about this. Pl. clarify.
2. Can a NRI give intt. free, left behind INR fund, as loan to his close relatives to avoid taxation & TDS dilemma ?
3. You mentioned TDS rate for a NRI is flat 20.6%, whereas some experts says it is maximum at 30.9%. Pl. claify.
4. If INR S/B A/C is not converted to NRO A/C for left behind INR fund, & let them be operated in usual previous manner TDS etc., what are the consequenses? Does sec. 115-I not provides immunity in such cases?
Pl. reply positevely -- Thanks. -- AKA
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7024 Points)
Replied 01 April 2011
| Originally posted by : A.K.Agrawal | ||
 |
1. I understand that sec.195 applies only for INCOMES ARISES OUT OF forex inward recd. for TDS & other treatments. But will the same treatment will have to be taken up for A NRI's INR fund left behind in India ? Nothing mentioned in chapter XII A about this. Pl. clarify.
No TDS u/s 195 is applicable for any payment to NR whether of forex inwards or otherwise.I reproduce relavent portion of sec. 195 for benifit of all " Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest or any other sum chargeable under the provisions of this Act (not being income chargeable under the head “Salaries”) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force "
Chapter XII-A contains special provisions for NRI's but the TDS sections are contained in Chapter XVII . Both the chapters work seprately and have no interconnection. 2. Can a NRI give intt. free, left behind INR fund, as loan to his close relatives to avoid taxation & TDS dilemma ?
NRI can even gift the said sum provided provisions of sec. 56 are taken care of.
I am not an expert but just a student of complex Indian Laws .The rates are provided in sec 115A(a)(ii) subject to to money coming in forex, otherwise the rate of 30.9% shall prevail.
FEMA doesn't permit the same and offcourse if the deductor is aware of the deductee being Non -resident than the provisions of sec. 195 shall appply.
Sec. 115I refers to provisions of Chapter Xii-A not being opted by NRI. |
 |
A.K.Agrawal
(Investments & Finance)
(132 Points)
Replied 01 April 2011
Your reply to my 1st query seems contradictory. You have mentioned - No TDS applicable to NR, whereas your quotation speaks reverse - Any person responsible -- shall deduct Income Tax @ ----
2nd query - Gift is ok, but what about INTEREST FREE LOAN to close relatives. IT official generally add deemed interest to income.
4rth query - can NRI opt for usual TDS & other operations vide sec. 115-I. Then why to convert ordinary S/B A/C to NRO --?IF NOT CONVERTED, WHAT ARE CONSEQUENCES & PENALTIES - ?
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7024 Points)
Replied 02 April 2011
| Originally posted by : A.K.Agrawal | ||
|
|
I stand corrected, I failed to put a comma.Kindly read the sentence in response to your query as
" No, TDS u/s 195 is applicable for any payment to NR whether of forex inwards or otherwise."
You have answered the same yourself
FEMA authorises RBI to levy penalty upto 3 times of the amount of contravention. |
|
A.K.Agrawal
(Investments & Finance)
(132 Points)
Replied 02 April 2011
Thanx for your reply.
Further - If NRI's INR own fund, generated previously in India, after duly paying Taxes, needs to be remitted to abroad to NRI's foreign bank A/C for his house purchase there, will it be advisable to remit --
1. Without converting his A/C to NRO or/ otherwise
2 First convert to NRO then remit ? Whereas amount in NRO A/C is said by experts to be non repartible.
Whether only Forex remitted from abroad to NRO A/C is non repartiable & INR fund generated in India & tranferred to NRO A/C is partiable ?
SANTHOSH
(MANAGER)
(40 Points)
Replied 27 April 2011
sir,
If there is any time limit to remit the deducted TDS to the Govt ? Can we remit it before 7th of next month as we do for the other cases ?
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7024 Points)
Replied 27 April 2011
The answer is yes .
Anuj
0-9810106211
Chintan Soni
(Tax Officer)
(25 Points)
Replied 28 March 2012
Can anybody give me the TDS Chart for payment of interest on deposit made to indian currency by NRI....
sneh
(student)
(25 Points)
Replied 10 June 2012
if indian company pay interest to non resident, whether it is liable to deduct tax at sourse? if yes what is the % and what is the exemption limit?
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7024 Points)
Replied 10 June 2012
Indian Company can't take loan from Non-resident, unless ECB guidelines under FEMA are followed.
Yes, as per Income Tax Act, TDS needs to be deducted for a single rupee payment to Non-resident @ 20.6%
Anuj
femaquery @ gmail.com
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