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Many NRIs are confused about whether they are eligible to pay a Tax Deduction at Source in India (TDS). The income tax deduction at source, you should bear in mind, is applicable to NRIs as well as ordinary residents of India. You may have several questions in your mind now like what is TDS returns.You may be wondering about the service tax deduction at source. You may also have several questions pertaining to the NRO account tax deduction at source. We are here to clarify the entire procedure for you. You should bear in mind that any income earned in India is taxable in India, whether you live in India or not.
Your taxation for the year depends a great deal on your residential status for the year. Here is how you will be considered a resident of India for tax purposes
Any non-resident who earns an income in India that particular financial year, even while living abroad, is liable to pay taxes in India.In many cases, for example, interest received on NRO bank accounts or sometimes even rental income, this tax is deducted in the form of TDS. However, you should remember that interest earned on NRE accounts, your income from abroad is not taxed in India. Indian resident bank account holders who earn an interest of more than INR 10,000 are also liable to pay TDS on it. But, if you are an NRO account holder, you do not have this minimum slab available to you.
Section 195 of the Income Tax Act covers TDS that Non-resident Indians are required to pay. The rates and conditions for NRIs, PIOs and OCI holders are different when compared to that of ordinary Indian residents. Here are the key areas listed out by Section 195.
If you hold an NRO account, then you are liable to pay taxes on it. This is currently taxed at 30%, and there is no basic exception limit. On the other hand, if you hold only NRE account or FCNR account, then there is no taxation on this amount.
Interest earned by you on all other investments like company bonds or corporate deposits, are liable to be taxed at 20%
Dividends received by you from equity shares or equity mutual funds are exempted from taxes.
Long-term capital gains, that is, profits made on sale at least one year after purchase, on equity shares and mutual funds are exempted from TDS. Whereas, short-term capital gains on the same are liable to be taxed at 15%
Under Section 195, TDS on rental income paid to an NRI would fall under the category of other income, as there is no separate rate prescribed for it. Hence, TDS on rental income will be charged at 30%. The payer of the rent is liable to pay this tax. He/she must get a Tax Deduction Account number (TAN) and get a TDS certificate for the same.
If you are an NRI, and you are receiving an income in India from professional services provided, you are liable to a TDS of 30%. The same applies if you are receiving any royalties from India.
All other income earned from India by an NRI is liable to a TDS of 30%. In addition to this amount, you may also have to pay an Education cess as well as surcharges.
Now that you have a clear idea about what exactly is meant by Tax Deduction at source in India (TDS). You should now have a thorough understanding about what is TDS return and what the TDS deduction rules are. You are, by now; already clear about the NRO account tax deduction at source. Armed with this knowledge, you are already half way to winning the battle. We hope this article has made it far easier for you to begin filing your income tax in India.
Q: Are NRO/NRE account holders eligible for loans against their fixed deposits?
A: Yes, except for the purpose of relending, carrying on agricultural/plantation activities or for investment in real estate business. Loans against NRE fixed deposits can, however, be utilized for...
Q: What is the maximum value of loans that can be taken against NRE/FCNR deposits?
A: The total value of all loans taken against NRE / FCNR accounts should not exceed Rs. 20 lakhs
Q: Can a loan be given to third parties on the security of an NRE/FCNR deposit?
A: Yes, a loan can be given to the third party on the security of an NRE/FCNR deposits.
Q: What are the purposes for which loans are given against NRE/FCNR deposits?
A: Loans can be taken against NRE / FCNR deposits for the following purposes:
*Personal purpose or for carrying on business activities
*Direct investment on non-repatriation basis by way of...
Q: Can OCI holders open PPF account in India?
A: OCI holders who are living in India are considered to be residents in India. Their status is no longer that of a Non-Resident (NRI). Therefore they can open PPF account in India.
While we are on...
Q: What are the step by step instructions to replace lost OCI card?
A: Before a lost OCI card can be replaced,
Applicants should file a police report. To apply for a replacement OCI Card, applicants will have to provide a copy of the complaint filed with the police....
Q: Can i repatriate funds in the NRI account?
A: The principal as well as the interest of the funds in an NRI account can be repatriated only if a person holds either an NRE account or an FCNR account. In case of an NRO account, only interest...
Q: Are there any prohibitions on the purpose for which loans cannot be taken?
A: The loans cannot be utilized for the purpose of re-lending or for carrying on agriculture or plantation activities or for investment in real estate business.
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