Hi, I am an NRI from UK and doing F&O trading through Zerodha. Every day, 30% of profit is deducting as TDS by Zerodha. I contacted Zerodha about it, and they are telling me that TDS is deducting as part of income tax policies.
When I checked UK - India DTAA. Its clearly stated that Business income is not taxed in India if there is no physical establishment. So, in my case TDS is not mandatory as income is taxed in the UK. I have UK tax residency certificate, and also 10F form submitted to Income Tax Department of India. Zerodha customer care/tickets are not helpful as those agents doesn’t have any knowelede about taxation treaties and just reading the paragraphs which mentioned in Zerodha Support Portal.
I am also doing derivatives trading with two other brokers, they are not deducting any TDS for me, but Zerodha is acting diffferently.
Are any NRIs doing F&O trading with Zerodha and how you are managing with it?
To the best of my knowledge, if you are a NRI, TDS deduction is mandatory. You can file your returns and then claim refund. I know for sure for NRI who does transaction in cash/delivery segment.
It is for this reason, I believe, even Zerodha charge NRI fees when it is free for resident customers as they have lot of reporting to do. Separate accounts are opened as Pins and Non pins.
With icici direct, if you have a pins account, you cannot use this account which is a nre account at Icici Bank for doing normal banking transactions. When you sell stock, the proceeds will be credited to this account, you need to transfer it to a NRE non pins account and from there you can do the transfer out or other banking transactions. This is relatively new rule. Credits are allowed as long as the proceeds are from NrE account or from outside.