TDS Rates for Non-Resident Taxpayers in India

Posted In | Finance | Accounting Software | India Accounting Tax

Non-resident taxpayers in India have to pay taxes on income earned in the country. The Indian tax authorities deduct tax at source (TDS) on payments made to non-residents. This article discusses the TDS rates applicable for non-resident taxpayers in India, including the different types of income, TDS rates, and the various exemptions and deductions available.

 

Types of Income Subject to TDS for Non-Residents

There are several types of income that non-residents may receive from India that are subject to TDS. These include:

 

• Interest on securities
   

• Dividends
   

• Royalties
   

• Fees for technical services
   

• Interest other than on securities
   

• Long-term capital gains
   

• Short-term capital gains
   

• Any other income
   

TDS Rates Applicable for Non-Resident Taxpayers

The TDS rates applicable to non-resident taxpayers vary depending on the type of income. The following table lists the TDS rates for different types of income:
 

Type of Income	TDS Rate
Interest on securities	20%
Dividends	20%
Royalties	10%
Fees for technical services	10%
Interest other than on securities	20%
Long-term capital gains	20%
Short-term capital gains	30%
Any other income	30%

 

It is important to note that the TDS rates mentioned above are subject to change as per the provisions of the Income Tax Act. Additionally, the TDS rates may be different for specific types of income if a tax treaty exists between India and the non-resident taxpayer's country of residence.

 

Exemptions and Deductions

Non-resident taxpayers in India can avail of certain deductions and exemptions from TDS. Some of these include:
 

• Interest earned on Non-Resident External (NRE) accounts is exempt from TDS
   

• Interest income from specified infrastructure bonds is exempt from TDS, subject to certain conditions
   

• Long-term capital gains arising from the transfer of specified capital assets are exempt from TDS
   

• Income from units of specified Mutual Funds is exempt from TDS
   

Non-resident taxpayers need to furnish their Tax Identification Number (TIN) or Permanent Account Number (PAN) to avail these exemptions and deductions.

 

Understanding the TDS rates applicable to non-resident taxpayers in India is essential to ensure compliance with the country's tax laws. Non-residents should also be aware of the exemptions and deductions available to them to minimize their tax liability. Consulting with a tax professional can provide valuable guidance and help non-residents navigate the complexities of the Indian tax system.