New rules
Rental and other income
While resident Indians are liable to pay TDS at the rate of 10% on rental income obtained from land and buildings, this rate is higher at 30%, along with a cess of 3%, for the nonresident Indians. All other taxable incomes of an NRI are also subject to a 30% TDS, besides the cess
Capital gains
No TDS is applicable on shortterm or long-term capital gains earned by resident Indians when they sell mutual funds or stocks. However, for NRIs, there is a 15% TDS (plus 3% cess) on short-term capital gains from shares and mutual funds if the securities transaction tax (STT) has been paid. If no STT has been paid, the TDS rate is higher at 30.9%. They are even subjected to a 10% TDS on long-term gains from shares and mutual funds.
Property deals
This year's budget has changed the TDS laws relating to property transactions. When a resident Indian purchases a property valued at over Rs 50 lakh, he has to deduct 1% TDS and deposit it with the government. However, if the property belongs to an NRI, the TDS is 20% even if the property is worth less than Rs 50 lakh. This makes it doubly difficult for NRIs to sell real estate. Bank interest Resident Indians can avoid the TDS on bank interest by submitting the Form 15G or 15H. However, NRIs are not permitted to submit Form 15G for their NRO deposits in banks, and TDS is mandatory. The problem doesn't end here. The TDS rate for NRO deposits is 30.9% compared with 10.3% for fixed deposits for resident Indians.
The TDS is applicable for a resident Indian if the interest exceeds Rs 10,000 in a year per bank branch. However, this threshold limit does not apply to NRO deposits. Even Rs 1,000 is subjected to TDS at the rate of 30.9%. The interest earned on all other investments, such as corporate deposits and bonds, is subject to a 20.6% TDS, whereas the rate for resident Indians is only 10.3%
Rental and other income
While resident Indians are liable to pay TDS at the rate of 10% on rental income obtained from land and buildings, this rate is higher at 30%, along with a cess of 3%, for the nonresident Indians. All other taxable incomes of an NRI are also subject to a 30% TDS, besides the cess
Capital gains
No TDS is applicable on shortterm or long-term capital gains earned by resident Indians when they sell mutual funds or stocks. However, for NRIs, there is a 15% TDS (plus 3% cess) on short-term capital gains from shares and mutual funds if the securities transaction tax (STT) has been paid. If no STT has been paid, the TDS rate is higher at 30.9%. They are even subjected to a 10% TDS on long-term gains from shares and mutual funds.
Property deals
This year's budget has changed the TDS laws relating to property transactions. When a resident Indian purchases a property valued at over Rs 50 lakh, he has to deduct 1% TDS and deposit it with the government. However, if the property belongs to an NRI, the TDS is 20% even if the property is worth less than Rs 50 lakh. This makes it doubly difficult for NRIs to sell real estate. Bank interest Resident Indians can avoid the TDS on bank interest by submitting the Form 15G or 15H. However, NRIs are not permitted to submit Form 15G for their NRO deposits in banks, and TDS is mandatory. The problem doesn't end here. The TDS rate for NRO deposits is 30.9% compared with 10.3% for fixed deposits for resident Indians.
The TDS is applicable for a resident Indian if the interest exceeds Rs 10,000 in a year per bank branch. However, this threshold limit does not apply to NRO deposits. Even Rs 1,000 is subjected to TDS at the rate of 30.9%. The interest earned on all other investments, such as corporate deposits and bonds, is subject to a 20.6% TDS, whereas the rate for resident Indians is only 10.3%