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Tax for NRIs and Foreign Companies

August 10, 2009
Withholding Tax for NRIs and Foreign Companies:
Withholding Tax Rates for payments made to Non-Residents are determined by the Finance Act passed by the Parliament for various years. The current rates are:
1. Interest – 20% of Gross Amount
2. Dividends – 10%
3. Royalties – 20%
4. Technical Services – 20%
5. Any other Services – Individuals – 30% of net income
Companies/Corporates – 40% of net income
The above rates are general and in respect of the countries with which India does not have a Double Taxation Avoidance Agreement (DTAA).
Double Taxation Relief:
India has entered into DTAA with 65 countries including countries like U.S.A., U.K., Japan, France, Germany, etc. These agreements provides for relief from the double taxation in respect of incomes by providing exemption and also by providing credits for taxes paid in one of the countries. These treaties are based on the general principles laid down in the model draft of the Organisation for Economic Cooperation and Development (OECD) with suitable modifications as agreed to by the other contracting countries. In case of countries with which India has double taxation avoidance agreements, the tax rates are determined by such agreements and are indicated for various countries as under:
Country
Dividends
%
Interest
%
Royalties
%
Australia
15
15
15
Austria
20
20
30
Bangladesh
15
10
10
Belarus
15
10
15
Belgium
15
15
20
Brazil
15
15
15
Bulgaria
15
15
20
Canada
25
15
15
China
10
10
10
Cyprus
15
10
15
Czechoslovakia
20
15
30
Czech Republic
10
10
10
Denmark
20
15
20
Egypt
20
20
30
Finland
15
10
20
France
10
15
10/20
Germany
10
10
10
Greece
20
20
30
Hungary
15
15
30
Indonesia
15
10
15
Israel
10
10
10
Italy
20
15
20
Japan
15
15
20
Jordan
10
10
20
Kazakhstan
10
10
10
Kenya
15
15
20
Korea
20
15
15
Kyrgyzstan
10
10
15
Libya
20
20
30
Malaysia
20
20
30
Malta
15
10
15
Mauritius
15
20
15
Mongolia
15
15
15
Morocco
10
10
10
Namibia
10
10
10
Nepal
15
15
15
Netherlands
10
10
10
New Zealand
15
10
10
Norway
15
15
30
Oman
12.5
10
15
Philippines
20
15
15
Poland
15
15
22.5
Portugal
15
10
10
Qatar
10
10
10
Romania
20
15
22.5
Russian Federation
10
10
10
Singapore
15
15
15
South Africa
10
10
10
Spain
15
15
20
Sri Lanka
15
10
10
Sweden
10
10
10
Switzerland
15
15
20
Syria
0
7.5
10
Tanzania
15
12.5
20
Thailand
20
20
15
Trinidad and Tobago
10
10
10
Turkey
15
15
15
Turkmenistan
10
10
10
United Arab Emirates
15
12.5
10
United Kingdom
15
15
15
United States
20
15
15
Uzbekistan
15
15
15
Vietnam
10
10
10
Zambia
15
10
10
Non treaty countries
0
20
20
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