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NRIs are not required to give foreign income, overseas bank details in India

Those who make payments to NRIs are required by law to deduct TDS at the time of making the payment

I was a non-resident Indian (NRI) and had bought a policy from an Indian insurer before the Double Taxation Avoidance Agreement (DTAA) was enforced in 2015. After the implementation, the insurer asked for a DTAA certificate from authorities in Saudi Arabia, where I lived. Can a rule be applied like that? Also, do I need give a tax residency certificate (TRC) to avoid tax deducted at source (TDS) at 31.20%?

—Nicasius Fernandes

Those who make payments to NRIs are required by law to deduct TDS at the time of making the payment. The deductor must know the rate of TDS. The rate of TDS can vary based on whether you are a resident or an NRI for tax purposes. Before deciding the rate of TDS, it is important for the deductor to consider the provisions under DTAA for the relevant country. If you meet the conditions, DTAA rates may apply for TDS. Usually, these rates are lower than normal rates of TDS. Therefore, it would be advisable to share the relevant details with your insurer to make sure TDS is deducted keeping in mind the double tax avoidance between the two countries.

This certificate is required if one’s income is likely to be taxed in two countries, the source country of the income and the country of residence of the taxpayer. As per the Income-tax Act, TRC has to be obtained from tax authorities of the resident country to claim relief under DTAA. In case you require TRC for India, an application may be made to the Indian tax authorities. Therefore, a deductor may require a certificate from you to make sure that you are an NRI and to identify the rate of TDS.

I recently returned from the UAE after living there for 14 years. I have a flat in Mumbai on which I have a loan from a nationalized bank in India. Can my relative in India repay my loan? What will be the effect on tax benefits?

—Puneet Sharma

Yes, your relative may pay your loan. However, if you were planning to avail tax benefits on interest on a home loan, those shall not be available to you after your relative has repaid the loan. Neither will your relative be able to claim any tax relief on repayment of such a home loan.

I started living in Australia last year. Do NRIs have to disclose their foreign income and foreign bank accounts details when filing income tax return in India?

—Name withheld on request

NRIs are not required to disclose details of foreign income and foreign bank account details. However, in case an NRI is claiming a refund of taxes and does not have a bank account in India, they must mention information about the foreign bank account, so that refund can be credited by the tax department.

Archit Gupta is founder and chief executive officer, ClearTax. Send in your queries and views at mintmoney@livemint.com

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