What are the DTAA Benefits for NRO Fixed Deposits ?
Double Taxation Avoidance Agreement (DTAA) is an agreement entered by India with various countries- Under the current DTAA provisions, you can enjoy concessional rate of Tax Deducted at Source (TDS), providing a higher yield as compared to the regular NRO FD offered today.
Please note that as per recent amendment to Section 90(2) of the Income Tax Act 1961 (Act) non residents have to provide "Tax Residency Certificate (TRC)" containing prescribed details issued by government authority of respective country in which they reside to avail benefit of reduced tax under Double Taxation Avoidance Agreement (DTAA). CBDT has prescribed the contents of TRC vide notification no. 39 dated September 17, 2012. Accordingly, all nonresident customers who wish to avail benefit of DTAA rates for their interest earned on NRO Deposits for FY 2013-14 (from 01.04.2013) and onwards have to mandatorily provide the " Tax Residency Certificate (TRC) " containing prescribed details to the bank. Please note that DTAA benefits cannot be given if TRC is not submitted.
You may download the file containing set of contents of TRC which may be provided to your tax/government authority to obtain a TRC.
List contents required in Tax Residency Certificate
Disclaimer: Please note that contents of TRC are specified for your convenience so that you do not miss out any contents to be prescribed on the TRC. You should check in your country if there is any format of TRC issued or whether the format includes all the contents listed.
In case you have already submitted documents to avail of DTAA benefit or want to avail of DTAA for the current financial year 2013-2014, you are requested to submit a latest TRC and PAN copy to avail of DTAA for the financial year 2013-2014, failing which the bank will deduct TDS on your NRO accounts at 30.9% which cannot be refunded.