NRI TDS Rates–Detailed Charts with All Must Know Information

NRI TDS Rates–Detailed Charts with All Must Know Information

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Key Takeaways

NRIs have to pay a Tax Deducted at Source for any payments made to anyone in India. A TDS is like an advance tax collected by the Government of India at the time of making a payment such as salary, interest payment, commission, etc. The below article explains the different sections of the Income Tax Act of India, under which NRIs have to pay, along with the TDS rate.

Introduction

Tax deducted at Source or TDS is the tax amount reduced by the payer at the time of making certain, specific payments. TDS is usually deducted by the payer while paying salary, interest on deposits, professional fees, commission, rent, and so on. Typically, the person receiving these amounts is obligated to pay the tax. But TDS was introduced by the Government to ensure that tax is deducted in advance. The recipients receive the net amount (after TDS deduction), and this amount is reduced from their final tax liability at the time of filing returns. Both Residents Indians and NRIs have to pay TDS on their income and other payments mentioned above. In this article, we have created detailed TDS charts pertaining to NRI payments. Read on.

COVID-19 and TDS Rates

The Coronavirus pandemic disrupted many businesses worldwide. Many companies suffered, and several of them shut down owing to the lockdown that affected all sectors of the Indian economy. Due to the pandemic and the adversities it caused, the Government of India extended relief to its citizens on the TDS rates for the period May 14, 2020, until March 31, 2021. This relief, however, was limited only to TDS rates and not for the general taxation rates, as per tax brackets, or where tax was to be collected at higher rates. Also, The GOI extended the reduced TDS benefit only to Resident Indians. As such, Non-Resident Indians cannot claim relief on TDS payments. As an NRI, you have to comply with the TDS requirements as per the TDS rates levied by the Government. Here is the TDS rate chart for NRIs.

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TDS chart for NRIs

The below TDS chart explains the TDS rates applicable for Non-Resident Indians

Under Income Tax Section

Particulars

TDS Rate (%)

192

Salary payment

10%(Normal Slab rate)

192A

Premature withdrawal from EPF

10%(Normal Slab rate)

194B

Income from winnings like lotteries, card games, crossword puzzles, card games, game shows, etc.

30%

194BB

Income by way of winnings - horse races

30%

194E

Payment to non-resident sportsmen or sports associations

20%

194EE

Payment for deposits under National Savings Scheme

10%

194F

Payment on repurchasing a unit by Mutual Fund/Unit Trust of India

20%

194G

Commission, charges, etc., on lottery ticket sales

5%

194 LB

Payment of interest on infrastructure debt fund

5%

194LBA

Income from business trust units
– interest received/receivable from any special purpose vehicle;
– any dividend referred to in sub-section (7) of section 115-O

5%/10%

194LBC

Income from investment in securitisation fund

30%

194LC

Interest payment by an Indian Company or business trust for money borrowed in foreign currency under a loan or by way of long-term bonds (which includes long-term infrastructure bond)

5%

194LD

Payment of interest on rupee denominated bonds offered by Indian Companies or Government securities to any Foreign Institutional Investors or Qualified Foreign Investors

5%

194N

Cash Payments not exceeding INR 1 Crore

2%

194N

Payment of certain amounts in cash (first proviso of section 194N)if
-– The amount exceeds INR 20 lakh but is up to Rs. 1 crore
– The amount exceeds INR 1 crore (Applicable from 01.07.2020)

25%

195

Any other payment made to a Non-Resident Indian under subsections of Section 195 below:

 

195(a)

Income against investment made by an NRI Citizen

20%

195(b)

Income by way of LTCG (Long-Term Capital Gains) under Section 115E in case of an NRI Citizen

10%

195 (c)

Income by way of LTCG under sub-clause (iii) of clause (c) of sub-section (1) of Section 193

10%

194(d)

Income by way of STGC (short-term capital gains) referred to in Section 111A

15%

194 (e )

Other forms of income by way of LTCG [not being LTGC referred to in clauses (33), (36) and (38) of Section 10]

20%

194(f)

Interest income payable by The Indian Government or any Indian concern on money borrowed or debt incurred in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC)

20%

194 (g)

Royalty Income payable by The Indian Government or any Indian concern against an agreement made by it with the Indian Government or concern, where such royalty is in consideration for transfer of any or all rights (including granting of a license) in respect to a copyrights in any books on subjects referred under first proviso to Section 115A (1A), to an Indian concern, or in with regards to any computer software under second proviso Section 115A(1A) of the Income-tax Act, to a person resident in India.

10%

194(h)

Royalty Income [not being royalty of nature referred to in sub-item (b)(i)(F)] payable by the Indian Government or any Indian concern against an agreement made by it with the Government or concern and where the agreement is with an Indian concern, is approved by the Central Government of India or where it concerns any matters included in the Indian industrial policy, for the time being in force, of the Indian Government, where the agreement is in accordance with that policy

10%

194 (i)

Income on fees against technical services payable by the Indian Government or any Indian concern against any agreement made by it with the Government or concern, and where such an agreement is with an Indian concern, is approved by the Central Government of India or where it concerns any matters included in the Indian industrial policy, for the time being in force, of the Indian Government of India, the agreement is in accordance with that policy

10%

194(j)

Any other income or payment made to a Non-Resident Indian

30%

196A

Income on Mutual Fund units specified under clause (23D) of section 10 of the IT Act; or-from the specified company referred to in Explanation to Section 10(clause 35)

20%

196B

Income from units (including LTCG on transfer of such units) to an offshore fund

10%

196C

Income from foreign currency bonds or Global Depository Receipt of an Indian company (including LTCG on transfer of such bonds or Receipts)

10%

196D

Income of Foreign Institutional Investors from securities (except capital gains or dividend arising from such securities)

20%

Conclusion

As an NRI, you cannot ignore the TDS rate chart. You have to pay a certain percentage of tax on everything – whether it is your income from Indian sources or investments in India. Also, the Indian government keeps modifying taxation rates during the Union Budget announcement each year. As such simple google search can help you find the latest TDS chart. The TDS rate chart for NRIs can be slightly complex to break down, so you should consult your investment advisor while making payments and ensure that you pay the TDS wherever it is applicable.

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*Disclaimer: This article is published purely from an information perspective and it should not be deduced that the offering is available from DBS Bank India Limited or in partnership with any of its channel partners.

The purpose of this blog is not to provide advice but to provide information. Sound professional advice should be taken before making any investment decisions. The bank will not be responsible for any tax loss/other loss suffered by a person acting on the above.

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