TDS for NRIs: everything you needed to know If you are an NRI and looking for the nri services, here are certain things you should know. The complete guide to NRI TDS The taxman has an extended reach as well, just like the long hand of the law. In particular, non-resident Indians (NRIs) would know this. You will most certainly be charged tax on all income you earn in India after becoming an NRI, as well as have it deducted at source. There are also vast differences in the rates for taxes deducted at source (TDS) between resident Indians and non-resident Indians. This column looks at the various incomes that an NRI may earn in India and how TDS is applied. At the time that the income is received, you should be an NRI Before we begin, let me clarify that taxes will only be deducted on incomes that are taxable in India. Similarly, when long-term capital gains from equity shares are tax-free in India, there would be no TDS. The other thing to remember is that you should be an NRI when you receive the income. During your time as a resident Indian, you may have purchased a long-term debenture of a company. You will be subject to TDS on any interest accumulated after becoming an NRI. Savings account interest In India, interest earned on non-resident external (NRE) and foreign currency non-resident (FCNR) accounts is not taxable. Hence, there would be no TDS. Non Resident Ordinary Account (NRO) interest, however, is taxable and subject to 30% TDS. As far as basic exemptions are concerned, there are none. In the case of bank deposits, interest earned by resident Indians is subject to TDS only over a limit of Rs 10000. There is no such limit for NRIs. Investment interest on all other investments TDS will apply to all other investments, such as corporate deposits and bonds. Taxes will be deducted from all payments in these situations by the company or party making the payment. Dividends A shareholder or unitholder is exempt from paying taxes on dividends from equity shares, equity mutual funds, and debt mutual funds. Capital gains on securities Stocks and equity mutual funds over 50% invested in equities. A long-term capital gain, measured from the date of purchase to the date of sale, is exempt from taxation. TDS will not apply. A 15 percent tax will be charged on short-term capital gains, that is, profits from sales within a year of purchase.
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