Interest earned on NRO Savings Account / NRO Fixed Deposit is subject to Tax deduction at source *(w.e.f Aug 09). TDS is deducted at 30% plus applicable surcharge and cess.
As per section 206AA introduced by Finance (No. 2) Act, 2009 w.e.f 01.04.2010, every person who receives income on which TDS is deductible shall furnish his PAN Number to the deductor, failing which TDS shall be deducted at the maximum marginal rate or 30% plus applicable surcharge and cess whichever is higher. The interest on NRO Accounts / Deposits and PIS transactions would be covered by the said rule
* TDS, when due and applicable will be deducted in accordance with the provisions of the Income Tax Act, 1961 and the Rules thereunder as in force. Such TDS shall be recovered from saving/current/demand deposit a/c(s).
Double Taxation Avoidance Agreement (DTAA)
Double Taxation Avoidance Agreement (DTAA) is an agreement entered by India with various countries. Under the current DTAA provisions, customer can enjoy concessional rate of Tax Deducted at Source (TDS) on interest earned in India. Hence by registering for DTAA clients can earn higher yield on their NRO deposits (FD as well as Savings Account).
NRIs who wish to avail DTAA benefit have to mandatorily provide 'Tax Residency Certificate (TRC)' to the deductor (Bank). This is applicable for all NR customers who wish to avail DTAA benefit with effect from 1st April 2012.
TRC is issued by the tax/government authority of the country where the NRI resides. So, customers have to check with the Tax Department or Finance Ministry in their country or with their Chartered Accountant abroad for the procedure to obtain TRC. No other document in lieu of TRC shall be considered for availing the DTAA rate for the said year.
If you are desirous of availing the tax rate deduction as per the DTAA, the same will be applicable once you submit the below mentioned documents:
Documents Required:
1) DTAA Annexure. Click Here.
2) PAN Card Copy self-attested
3) TRC. Click hereto know details to be furnished in TRC
4)Form 10F*
*Form 10F need to be generated electronicallyon income tax e-portal and steps to followed for generating 10F are as follows:
1. Nonresident assessee has to log into his account
2. Go to e File Tab
3. Select ‘Income Tax Forms’ Then select ‘File Income Tax Forms’
4. Next, select ‘Persons not dependent on any Source of Income (Source of Income not relevant)’
5. From the list of forms available, find Form 10 F
6. Select the relevant Assessment Year (As on date, online Form 10 F can be filed only for AY 2022 23 Option tofurnish the same for AY 2023 24 is not available
7. Fill the requisite details in Form 10 F Please note that copy of TRC has to be attached along with Form 10 F
8. Verify/Sign Form 10 F
As per Rule 131 of Income tax Rules, 1962 the prescribed forms (incl Form 10 F) have to be electronically furnished
- i. under digital signature, if the return of income is required to be furnished under digital signature or
- ii. through electronic verification code in a case not covered under clausei
