As anyou might be receiving income in India in many ways. Income earned or accrued in India is taxable in India. Based on the nature of is deducted at source ( ). Sometimes, is also called as withholding tax, which is essentially the same.
However, the rates and conditions forand tax refund are different for from that of Indian residents. If you happen to reside in a country with which India has a Double Agreement (DTAA), rates are usually lower.
Here is a low-down onunder various income heads for an and methods to reduce it or seek refunds.
Interest earned on NRO banking accounts is taxable, while it is tax-free for NRE and FCNR (B) accounts. The bank deducts theat 31.2% on an NRO account and rate increases with the increase in surcharge rates applicable for annual income over Rs 50 lakh. For instance, is highest at 42.74% for income in excess of Rs 5 crore.
is done at the highest applicable tax rate on made from selling . For equity-oriented ( 65% or more into equities), any redemption made within a year of purchase attracts Short-Term (STCG) tax of 15%, which is also the rate. Similarly, if it is sold after a year, on Long-Term (LTCG) is 10% without indexation benefit.
For debt and other non-equity oriented, you need to hold for three years or more to qualify for LTCG rates. Given below are its applicable rates for .
on Stocks and derivatives
Akin to, 10% and 15% is applicable on LTCG and STCG respectively, made from the sale of shares. However, if you are unable to provide documentary proof on trading and source of (namely contract note and bank details from where the purchases were made) is deducted at the maximum rate of 15% and that too on the sales proceeds, instead of the (as the latter is not known).
Therate also depends on the type of bank account you hold. It is lower at 10% in case of NRE or an NRO Portfolio Investment Scheme (PIS) account, even if you do not submit documentary proof, since PIS cell has details of your purchase transactions. PIS is an RBI scheme whereby can purchase and sell shares and convertible debentures of Indian companies from a stock exchange by routing transactions through a designated bank account.
For those trading in futures and options,at the rate of 30.90% (tax 30% plus service charge 3%) is applicable and is usually deducted from the net profit for a calendar month.
If you have let-out your residential property in India, there is a compulsoryof 31.2% that needs to be deducted by the tenant from the rent every month. You can, however, apply for a certificate for deducting at a lower rate with the Jurisdictional Assessing Officer of the in India. After this certificate is received by the , the tenant can deduct at the agreed rates.
of non-residents from owning equity shares as well as is subject to of 20% plus surcharge and cess.
Sale of house property
If you are selling property within two years of purchase,rates of 30 % become applicable and it is 20% if sold within two years. Moreover, there is a surcharge as well as education & health cess that varies based on the sale value of the property.
If the sale value of the property is above Rs 50 lakh and less than Rs 1 crore, 10% surcharge is applicable along with 4% health and education cess. It takes the effectiverate to 22.88%. Surcharge rate increases with the rise in the property value which in turn augments the overall rates. rates are calculated on the sale value of the property and not on the .
You can apply for a certificate for deductingat a lower rate with the Jurisdictional Assessing Officer of the IT department. However, the application for such a certificate has to be made before executing the sales agreement.
Tax refunds and DTAA benefit
Surcharge and cess are levied additionally on the above-mentioned baserates of . Surcharge rates are applicable (between 10%-37%) if your annual income is above Rs 50 lakh annually in India. So, for instance, if an has an annual income of Rs 1 crore, then the base rate of 10% effectively becomes 11.44% after accounting for 10% surcharge and 4% cess.
If theamount is more than the actual , you will get a tax refund after you file your returns. Moreover, if you are resident of a country with which India has a DTAA, you get a tax benefit as an exemption (lower rate), deduction (from total income) or as a tax credit.
If you are earning income in the form of royalty or fees for rendering technical services, then at least a 10% link.is applicable on it. Any other income usually attracts 30% . For complete details on rates applicable in all DTAA countries, click on this
To seek lowerunder DTAA, you primarily need to submit Form 10F and Tax Residency Certificate (TRC). And where the is withheld as per the DTAA arrangement, the surcharge, as well as cess, does not apply.
on income in India are usually done at the maximum rate. However, by making necessary applications to tax authorities and seeking DTAA benefits, rates could be brought down.