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Relaxation from deduction of tax at higher rate under section 206AA

Budget 2016 proposes to amend section 206AA of the Income-tax Act so as to provide that TDS shall not be deducted at a higher rate in case of non-residents not having PAN, subject to prescribed condition.

New Rule 37BC of Income tax Rule 1962, provides relaxation from deduction of tax at higher rate under section 206AA in respect of payments in the nature of interest, royalty, fees for technical services and payments on transfer of any capital asset, if the deductee furnishes certain details and the documents specified in sub-rule (2) to the deductor.

The above rule applicable to non-resident , not being a company, or a foreign company if they furnish the following details and documents to the deductor

  1. Name, e-mail id, contact number;
  2. Address in the country of which the deductee (non-resident) is a resident;
  3. Tax Residency Certificate (TRC) from the Government of that country if the law of that country provides for issuance of such certificate;
  4. Tax Identification Number (TIN) or any other Unique Identification Number of the non-resident of his residence country

All the above information needs to be furnished in TDS returns as well.

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