NRIs without PAN: How to avoid higher TDS?

Those who are unable to furnish PAN details have to face higher TDS rates. This also applies to NRIs, and foreign company, who must furnish PAN information or else TDS will be deducted at maximum rates.

In a recent circular the income tax department has eased the rules for NRIs who don’t have PAN or foreign companies who do not have a PAN and receive certain payments.

 

NRIs or a Foreign Company can submit alternate documents.

 

NRIs without PAN can submit these alternate documents to avoid higher TDS deduction-

(a) name, e-mail id, contact number

(b) address of NRI’s country of residence

(c) Tax Residency Certificate (TRC) from the Government of that country if the law of that country provides for issuance of such certificate

(d) Tax Identification Number (TIN) or any other Unique Identification Number (UIN) of the non-resident from the country where he is resident.

 

These documents can be submitted by NRIs or Foreign Companies who do not have a PAN to prevent higher rates of TDS.

 

These rules do not apply to the following payments. Basically PAN is mandatory in case of following payments to avoid higher TDS  –

  1. Interest
  2. Royalty
  3. Fees for technical services
  4. Payments on transfer of any capital asset.

 

This information is important to you if you are a DEDUCTOR and making a payment to an NRI without PAN.

 

Did you know you can file TDS Returns on our product www.clearTDS.com

 

NOTE: Higher rates of TDS apply when PAN is not furnished [under section 206AA of the income tax act].

Highest rate of the following is used-

  • at the rate specified in the relevant provision of the income tax act OR
  • at the rate or rates in force OR
  • at the rate of 20%

 

As per CBDT [Notification No. 53 /2016, F.No.370 142/16/2016-TPL] dated 24th June 2016

 

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