Anil aggarwal is a NRI (Non resident Indian) living in the United states from the last 8 years. He has the interest income from India which he receives in his NRO (Non resident Ordinary) account and NRE (Non resident external) account. The interest income in NRE account is tax free but bank deducts TDS on interest income on NRO account at rate of 30%.
As per Mr. Anil Aggarwal, his total interest income is Rs. 1 lakh which is much lower than the exemption limit of income tax. Bank deducts TDS on his interest income at 30% and now he needs to file a return to claim refund in income tax.
If Mr. Anil is Indian resident, he can submit form 15G to the bank requesting not to deduct TDS as his total income less than basic exemption limit (Rs. 2 lakh).
Can he also submit Form 15G to the bank as non resident?
The answer is NO.
Form 15G and 15H
Form 15G and 15H (for senior citizen) are the forms which one can submit to the banks so that bank will not deduct TDS on interest income. Only assessee can submit these forms whose total income is less than exempted limit of income tax which is currently Rs. 2 lakhs.
But the condition is that Form 15G and 15H are only can be filed by resident Indians. In case of residents Indian, TDS threshold limit is Rs. 10000 as TDS will only be deducted if the interest income is Rs. 10000 or above.
In case of NRIs, TDS is deducted on interest income at rate of 30 %( 15% in case Tax Residency Certificate is submitted from a treaty country). There is no threshold limit on the interest income earned by NRIs as every rupee of interest attracts TDS at 30%.
What NRIs can do
Income tax law has a separate procedure if you are in the same situation as Mr. Anil. "Such persons must file an application under section 195(3) of the Income Tax Act to the jurisdictional tax officer to obtain a certificate of non-deduction or lower deduction of taxes,"
You must apply this certificate to Income tax officer in your jurisdiction and if Officer grants you the waiver, you can submit this form to the bank for non deducting TDS on interest income.
But granting waiver from income tax department is not so easy. It is all about tax officer giving grant or not. So the best way is to file income tax return and claim TDS refund.
TDS refund is only available if resident or non-resident Indian has a Permanent Account Number (PAN).
Tags-form 15g,form 15h,form 15g for nri,form 15h for nri