TDS for NRIs

Tax Deduction At Source For NRIs

Section 194I of the Income-tax Act provides for deduction of tax at source on rental income. This states that the rate for deduction on payments to individuals will be 15% (plus surcharge). Section 194 - I will now be amended to provide that in t case a non-resident receives rental income, TDS will not be @ 15% but the rate would be 30% plus surcharge.

Here is the table that provides with all the details:

  • Persons who are liable to deduct:- Any person responsible for paying to a non-corporate, non-resident assessee or to a Company other than a domestic company.
  • Persons from whom deduction is to take place:- Non-corporate, non-resident assessee or a Company other than a domestic company.
  • Nature of Income from which deduction is to be made:- Any interest or any other sum (not being income chargeable under the head ''Salaries'').
  • Amount on which tax has to be deducted:- Any sum chargeable under the provisions of the Act other than interest on Securities and Salaries.
  • Time when tax is to be deducted:- At the time of Credit of the income to the account of the Payee or even a Suspense account or at the time of payment in cash or by issue or a Cheque or a draft, or by any other mode, whichever earlier.
Rates at which tax is to be deducted:-
  • Investment Income 20% 
  • Long Term Capital Gain (U/S 115E) 10% 
  • Long Term capital Gain in respect of Assets other than those specified in clauses 33 and 36 of section 10. 20%
  • Interest payable in Foreign Currency 20% 
  • Any other income chargeable to tax 30% 
  • Surcharge is payable at 10% on the tax in case of Non-resident for the financial year 2003-2004 i.e. assessment year 2004-2005 of income exceeds Rs 8.5 lacs.
Time within which the tax deducted is to be paid:- When payment is credited on the last day of the accounting year, the tax deducted has to be paid within 2 months from the end of the month in which the credit is made. In any other case: Within one-week from the last day of the month in which the deduction is made.
  • Returns & Form No.:- Form No. 27
  • Due date for filing of the Return:- Within 14 days from the end of the quarter.
  • Time limit to issue TDS Certificate in Form No.16A:- Within one month from the end of the month in which credit is given or the amount is paid.
  • Form for application of lower rate of tax:- Application has to be made in Form Nos. 13, 15C/D to the ITO for NIL deduction or deduction of tax at a rate lower than the prescribed rate