Tds on rent to nri

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The assessee has to pay rent of Rs. 80000/- pm to NRI who resides in Belgium. She is a senior citizen holiding valid Indian PAN. She doesnt file Income Tax Returns in India. The NRI lady is insisting not to deduct tax at source as isnt subject to tax in india. What is the applicability of the relevant section 195? Please advice the consequences if-:

1. The assessee deducted the Tax at source.

2. The assessee does not Deduct Tax at source.

3. How will the NRI lady claim refund is the TDS is deposited with the government.

Thank you!

Replies (4)

Where is the Location of Property.If the Property is in india for which rent is paid, then Lady income is chargeable to income tax as per sec.9.In that case TDS is to be deducted as Per rate in DTAA or Indian Income Tax Act, whichever is more beneficial to assesse.

Is You don't deduct the TDS, you will be deemed as an assesse in default.Refer sec.220 & 221.

For Refund, she has to file Income Tax return in the ITR-1

The premises is in india

Since Prooerty is in india, then TDS is to be deduted u/s 195 @ 30.9% or DTAA Rate ,whichever is lower.

DTAA between India & Belgium:https://law.incometaxindia.gov.in/DIT/File_opener.aspx?fn=https://law.incometaxindia.gov.in/Directtaxlaws/cbdt/dta/A1_Belgium.htm

Also Refer Sec. 90 of Income Tax Act which deals with DTAA

I know it is quite difficult to understand DTAA, but try it and if fails , deduct TDS @ 30.9%

Thank you! Much appreciate your help!

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