Tds rate on payment to nri
This query is : Resolved
20 March 2013
Dear All,
One of my client is paying rent on immovable property. Please inform me the rate on which the tax is to be deducted at source. Is it 10% u/s 194I or 30.90% u/s 195..?
Is there any other special rate under DTAA if the payment is made in New Zealand?
Thanks.
One of my client is paying rent on immovable property. Please inform me the rate on which the tax is to be deducted at source. Is it 10% u/s 194I or 30.90% u/s 195..?
Is there any other special rate under DTAA if the payment is made in New Zealand?
Thanks.
20 March 2013
dear neelay...
in your case sec. 194I will not be applicable because it will attract only in case on payment to a resident.
and as per DTAA with new Zealand.. it is written that income from immovable property will also be taxed be taxed in the country in which it is arise,.
therefore in your case tax rate will be 30.90%
in your case sec. 194I will not be applicable because it will attract only in case on payment to a resident.
and as per DTAA with new Zealand.. it is written that income from immovable property will also be taxed be taxed in the country in which it is arise,.
therefore in your case tax rate will be 30.90%
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20 March 2013
THank you for your insightful answer .
20 March 2013
Piyush Sir,
Do I have to get Form 15CB and 15CA filled.?
Do I have to get Form 15CB and 15CA filled.?
28 July 2025
Great question! Here’s a clear explanation about **TDS on rent paid to an NRI (Non-Resident Indian)** on immovable property, including the impact of **DTAA with New Zealand** and the **need for Forms 15CA/15CB**.
---
## 1. **Which Section Applies?**
* **Section 194I**: TDS on rent is generally applicable **only when the payee is a resident Indian**.
* **Section 195**: Applies to payments to **non-residents (including NRIs)**.
Since your client is paying rent to an **NRI**, **Section 195** applies.
---
## 2. **Applicable TDS Rate**
### a) **Domestic Rate (Without DTAA)**
* The normal tax rate on income from rent for NRIs is the **maximum marginal rate (MMR)**, which was **30% + surcharge + cess** in FY 2012–13.
* Including education cess, the effective rate comes to around **30.90%**.
### b) **DTAA Rate: India – New Zealand**
* Article on **Income from Immovable Property** generally states that **taxation rights lie in the country where the property is situated**.
* Hence, India can tax the rent income.
* The **DTAA may provide a lower withholding tax rate** or exemptions.
* **Check the specific India-New Zealand DTAA** article on immovable property income (usually Article 6), which typically doesn't reduce withholding but allows credit in New Zealand.
If no reduced withholding is provided in the DTAA, **the domestic rate (30.90%) applies**.
---
## 3. **Is TDS Deduction Mandatory?**
* Yes, **TDS must be deducted by the tenant (payer) on rent payments to an NRI under Section 195**.
* The tenant must **deduct TDS at the prescribed rate before making the payment**.
---
## 4. **Form 15CA and 15CB**
* Yes, **Form 15CA and 15CB are required for remittances or payments to non-residents**.
* **Form 15CB**: Certificate from a Chartered Accountant certifying that TDS has been deducted as per law.
* **Form 15CA**: Declaration by the remitter about the details of the remittance and TDS.
These forms must be filed electronically **before remitting the payment**.
---
## **Summary**
| Parameter | Detail |
| --------------------------- | ------------------------------------------------------------- |
| Applicable Section | **Section 195** (payment to non-resident) |
| Applicable TDS Rate | \~**30.90%** (incl. cess & surcharge) or as per DTAA if lower |
| Is Form 15CA/15CB required? | **Yes, mandatory** |
| Reference to DTAA | India-New Zealand DTAA Article on Immovable Property |
---
If you want, I can help you with a sample Form 15CB certificate format or guide you through filing Forms 15CA/15CB. Would you like that?
---
## 1. **Which Section Applies?**
* **Section 194I**: TDS on rent is generally applicable **only when the payee is a resident Indian**.
* **Section 195**: Applies to payments to **non-residents (including NRIs)**.
Since your client is paying rent to an **NRI**, **Section 195** applies.
---
## 2. **Applicable TDS Rate**
### a) **Domestic Rate (Without DTAA)**
* The normal tax rate on income from rent for NRIs is the **maximum marginal rate (MMR)**, which was **30% + surcharge + cess** in FY 2012–13.
* Including education cess, the effective rate comes to around **30.90%**.
### b) **DTAA Rate: India – New Zealand**
* Article on **Income from Immovable Property** generally states that **taxation rights lie in the country where the property is situated**.
* Hence, India can tax the rent income.
* The **DTAA may provide a lower withholding tax rate** or exemptions.
* **Check the specific India-New Zealand DTAA** article on immovable property income (usually Article 6), which typically doesn't reduce withholding but allows credit in New Zealand.
If no reduced withholding is provided in the DTAA, **the domestic rate (30.90%) applies**.
---
## 3. **Is TDS Deduction Mandatory?**
* Yes, **TDS must be deducted by the tenant (payer) on rent payments to an NRI under Section 195**.
* The tenant must **deduct TDS at the prescribed rate before making the payment**.
---
## 4. **Form 15CA and 15CB**
* Yes, **Form 15CA and 15CB are required for remittances or payments to non-residents**.
* **Form 15CB**: Certificate from a Chartered Accountant certifying that TDS has been deducted as per law.
* **Form 15CA**: Declaration by the remitter about the details of the remittance and TDS.
These forms must be filed electronically **before remitting the payment**.
---
## **Summary**
| Parameter | Detail |
| --------------------------- | ------------------------------------------------------------- |
| Applicable Section | **Section 195** (payment to non-resident) |
| Applicable TDS Rate | \~**30.90%** (incl. cess & surcharge) or as per DTAA if lower |
| Is Form 15CA/15CB required? | **Yes, mandatory** |
| Reference to DTAA | India-New Zealand DTAA Article on Immovable Property |
---
If you want, I can help you with a sample Form 15CB certificate format or guide you through filing Forms 15CA/15CB. Would you like that?
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