I found that for NRO savings accounts 30% tds is levied on interest income …but normal resident account this interest is taxed as per applicable tax rate. For savings account there is no TDS at all. Why NRO pay such tax i.e. 30% on interest income? Just because their currency is stronger than Indian Rupee ? what I am missing here ?
Also for short term capital gains - TDS is deducted for NRI @15% and lTCG is tds @10% but for domestic/resident account - no tds is deducted correct? Resident account are supposed to pay quarterly advanced tax instead correct?
Primary reason is to ensure that the taxes from NRIs are collected from earliest point of time; so that there is no difficulty in collection of tax subsequently at the time of regular filing.
Earlier, it used to get difficult for tracing them and asking them to pay taxes in India on Incomes accrued and received in India.
Further, it was resulting in loss of revenue to the department as NRIs may sometimes have no assets in India from which tax could be collected.
Hence, all the payments/(incomes) to NRIs/Non Residents subject to a few are done with TDS Deduction.
Maximum slab rate is 30% - Hence 31.2%(including cess) TDS is deducted. If surcharge is applicable, including the component of surcharge will be deducted.
STCG where STT is paid and LTCG are taxed @ 15% and 10% - hence 15% and 10% are deducted.
So apart from TDS for all Savings +FD accounts as well as STCG and LTCG - what else is different between NRI taxes vs domestic taxes?
It seems like Govt wants to charge max TDS from NRI but those NRI will have same tax rate as domestic Indians so …if they have paid excess via TDS - than they can get refund. NRI don’t end up paying more taxes than domestic Indians correct?
I read somewhere NRI can not claim deductions like residents Indians …can you please share which deductions NRI can not claim but resident Indians can? @San78@AkshayAtur