TDS on interest earned by banks is 20 % if you do not have PAN

Form 15G and Form 15H are applicable only for Indian residents

by Ms. Saroj Maniar

Is it compulsory for banks to deduct 33.99 % across the board on interest from non-resident Indians (NRIs) or 10 % against permanent account number (PAN)? Do banks accept form 15 G/15 H, where applicable?

 - Mr. V.S. Rajan

Banks have to withhold tax on interest—up to Rs. 10 million—paid to NRIs at 30.9 %. If the interest paid exceeds  Rs.10 million, the rate of withholding tax is 33.99 % on account of surcharge of 10 %. But, if you are a tax resident of a country with which India has a Double Tax Avoidance Agreement (DTAA) and the rate of tax on interest earned as per the DTAA is lower, then you can get the benefit of lower withholding tax.

You would need to produce a tax residency certificate (TRC), containing prescribed particulars, of the country in which you are a tax resident. If the TRC does not contain the prescribed particulars, you will need to fill in a declaration in form 10 F. If you do not have a PAN, the minimum rate of withholding tax would be 20 %.

 Form 15 G and Form 15 H are applicable only for Indian residents and banks can not accept these from NRIs.

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