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Representation to Finance Ministry & Financial Institutions  » TDS as per DTAA - our rep. to SBI in 2008 finds place in Finance Bill, 2012

TDS as per DTAA - our rep. to SBI in 2008 finds place in Finance Bill, 2012.

 

 

To,

Shri Pratip Chaudhuri,

Chairman,

State Bank of India,

Mumbai.

 

Dear Shri Chaudhuri.

 
Sub:-    TDS on NRO Deposits for Middle East NRIs
 
In year 2008, we had sent a presentation to State Bank of India submitting our views as regards incorrect and wrongful deduction of tax at concessional rate on interest payable on Non-Resident Ordinary (NRO) deposits of Non-Resident Indians (NRIs) residing in Oman, Kuwait, Qatar, Bahrain and other Middle East countries other than UAE.   We had also written to other banks including your bank about the same.
 
Now,  Hon. Finance Minister while presenting Finance Bill 2012-13 has vindicated our view and introduced Section 90 and 90A whereby Non-Residents wishing to avail benefits of Double Taxation Avoidance Agreement (DTAA) are required to provide Tax Residency Certificate issued by the Government of the country wherein they are residing.
 
We are forwarding a copy of our presentation sent to State Bank of India which inter alia applies to all the banks who have followed the methodology on Tax Deduction at Source  (TDS) of lower rate as applicable  under relevant DTAA of Oman, Kuwait, Qatar, Bahrain and other Middle East countries other than UAE.  
 
We draw your attention to the fact that from 01/04/2012, Tax will be required to be deducted at source @ 30% on interest payable on NRO deposits from NRIs of these Gulf countries unless they produce Tax Residency Certificate of respective Government of the country of their residence as otherwise will not be eligible for the benefit of provisions of DTAA and as individuals are not taxed at all in said Gulf countries, it may not be possible for such NRO deposit holders m to avail such Certificate from Government of their residence.
 
It may be noted that said provisions will also be applicable to residents of other countries wherein individuals are taxable entities such as USA, UK, Kenya etc.   We are enclosing a copy of relevant proposal for your perusal [Annexure 1].
 
In case you need any clarifications, please inform.
 
Thanking you in anticipation.
 
Sincerely.
 
RAJESH H DHRUVA
Chief Executive
femaonline.com
 

Tel. No. : 0091 281 245 3367 (four lines) / 245 9613
Cell : 0091 98240 49944

email  rajesh@femaonline.com ; keynote@nribanks.com

 

 

 

 

 

AS INTRODUCED IN LOK SABHA

ON 16TH MARCH, 2012

Bill No. 11 of 2012

THE FINANCE BILL, 2012

A

BILL

to give effect to the financial proposals of the Central Government for the

financial year 2012-2013.

BE it enacted by Parliament in the Sixty-third Year of the Republic of India as follows:—…………

 

CHAPTER III

DIRECT TAXES

Income-tax…..

 

In section 90 of the Income-tax Act,—

(a) after sub-section (2), the following sub-section shall be inserted with effect from the 1st day of

April, 2013, namely:—

“(2A) Notwithstanding anything contained in sub-section (2), the provisions of Chapter X-A of

the Act shall apply to the assessee, even if such provisions are not beneficial to him.”;

(b) after sub-section (3) and before Explanation 1, the following sub-section shall be inserted

with effect from the 1st day of April, 2013, namely:—

“(4) An assessee, not being a resident, to whom an agreement referred to in sub-section (1) applies, shall not be entitled to claim any relief under such agreement unless a certificate, containing such particulars as may be prescribed, of his being a resident in any country outside India or specified territory outside India, as the case may be, is obtained by him from the Government of

that country or specified territory.”; ………………………

 

32. In section 90A of the Income-tax Act,—

(a) after sub-section (2), the following sub-section shall be inserted with effect from the 1st day of April, 2013, namely:—

“(2A) Notwithstanding anything contained in sub-section (2), the provisions of Chapter X-A of the Act shall apply to the assessee, even if such provisions are not beneficial to him.”;

(b) after sub-section (3) and before Explanation 1, the following sub-section shall be inserted with effect from the 1st day of April, 2013, namely:—

“(4) An assessee, not being a resident, to whom the agreement referred to in sub-section (1) applies, shall not be entitled to claim any relief under such agreement unless a certificate, containing such particulars as may be prescribed, of his being a resident in any specified territory outside India, is obtained by him from the Government of that specified territory.”;……..

 
 

 

COPIES OF OUR REPRESENTATIONS TO STATE BANK OF INDIA DATED 6th DEC. 2008 ......................