Taxation

TDS on interest on NRO Deposit

NRIs residing in certain countries can avail the benefit of reduced rate of TDS on NRO deposits (Savings Bank and Term Deposits) under Double Tax Avoidance Agreement (DTAA), subject to the fulfillment of certain conditions.

This benefit may be given after obtaining Tax Residency Certificate (TRC) issued by the Government of the country or the specified territory of which the assessee claims to be a resident for the purposes of tax.

The rates of deduction under DTAA in respect of various countries are given below.

Table: – TDS rates for various countries as per DTAA with India
(*The contents of this table may subject to change regularly)

Country TDS rate on
interest to
be charged
Country TDS rate on
interest to
be charged
Country TDS rate on
interest to
be charged
Americas Asia Middle East
USA 15% Thailand 20% UAE 12.5%
Canada 15% Singapore 15% Qatar 10%
Trinidad & Tobago 10% Philippines 15% Saudi Arabia 10%
Japan 10% Oman 10%
Indonesia 10% Kuwait 10%
Malaysia 10%
Vietnam 10%
Europe Africa Australia & Oceania
Ireland 10% Kenya 15% Australia 15%
Switzerland 10% United Arab Republic (Egypt) 20% New Zealand 10%
Netherlands 10% Tanzania 10%
Belgium 15% Mozambique 10%
France 10%
United Kingdom 15%
Spain 15%
Germany 10%
Italy 15%
Sweden 10%

In absence of PAN card, TDS would be deducted at above DTAA rates or 20.6%, whichever is higher.

NRIs should note that

  • The recipient should be a tax resident of the respective country in terms of the DTAA agreement and should be entitled to the benefits of DTAA.
  • The recipient of interest should be the beneficial owner.
  • Banks generally will not be automatically updating in the system the TDS rate in line with DTAA.Generally,the benefits under DTAA scheme can be passed on to the customer by Banks only on the basis of the specific customer request.
  • NRIs should furnish the Tax Residency Certificate (TRC), Form 10 F and self-declaration form to the Banks every financial year latest by the first week of the financial year for which the DTAA benefit is to be availed.
  • NRIs should enquire the Bank Branches about the benefits of DTAA while opening a new NRO Savings Bank or Fixed Deposit.Please go through our post about nri accounts  which contains some more information on NRO and NRE accounts.
  • For US based NRIs there is specific Tax Residency Certificate form 6166, which is issued by the Internal Revenue Service of USA. This certificate is issued on making an application in form 8802.

NRIs who would like to apply for PAN Card,write to nri@nrimaster.com

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