The article talks about Form 15G and explains what NRIs can do to avoid Tax Deducted at Source (TDS) as interest from NRE account is tax-free but, the bank deducts 30% tax on interest from NRO account.
Form 15G (or Form 15H in the case of senior citizens) is a form prescribed u/s 197A of the Income Tax Act. If an individual submits this form to a bank, then that bank does not deduct TDS on any interest income. This form is beneficial for those whose total income for the financial year is below the basic exemption limit, i.e. Rs. 2 lakh. But, this form is applicable for only resident Indians. The form is irrelevant for non-resident Indians.
The article states that in the case of residents, 10% TDS is deducted if the interest income exceeds Rs.10,000 in the particular financial year, while in the case of NRIs, TDS is deducted at the rate of 30%.
The article says that NRIs have to follow a different route as Form 15G is of no significance to them. The income tax law defines a different procedure for NRIs. Vaibhav Sankla, Director, H&R Block India, says that NRIs can file an application u/s
195(3) of the Income Tax Act to the jurisdictional tax officer to obtain a certificate of non-deduction or lower deduction of taxes.
The article points out that PAN is essential to make any claim for exemption from TDS.
Source : Economic Times