TDS ON NRO DEPOSIT

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OM PRAKASH JALAN

OM PRAKASH JALAN (Querist)
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03 August 2010 RATE AND SECTION OF IT

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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03 August 2010 Rate is 30%
Section is 195
If the depositor is a non resident of a country to which a double taxation avoidance agreement prevails, that rate, if less than 30 % ,can be adopted.
But the DTAA rate if less than 20 %, the depositor has to give PAN card copy to the bank otherwise tax will be deucted @ 20% under section 206 AA.
The authority for advance ruling in the year 2008 has decided in a case that tax need to be deducted only @ 20% on the interest on NRO fixed deposits on the view that the interest is generated from a foreigh exchange asset.

CA. Pradeep Nayak

CA. Pradeep Nayak (Expert)
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03 August 2010 The interest on NRO is fully taxable.

TDS is applicable at 30.9% on the entire NRO interest (without any threshold) - Sec. 195.

If the depositor is a resident of a country which has DTAA with India, such rates as precribed the DTAA shall apply, subject to Sec 206AA.

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