NRO FD Interest TDS

POSTED BY Ramprakash ON May 19, 2012 5:32 pm COMMENTS (7)

Hi

I fall in 20% tax bracket. I had a 94 DAY,15 lac FD in HSBC NRO which matured in March 2011.

I was an NRI till 2009-2010 FY. One month before the FD matured, I had visited the branch and converted my status and sacing accounts from NRE/NRO to Resident. My Form 26AS shows that the interest on 15 lac FD and interest from savings account has been deducted at 30.9%. Wheres as all my other bank accounts deduct TDS at 10%.

I also checked my profile online on hsbc.in and they have record of my PAN Number.

Any idea why they deducted TDS at 30.9% and what should I do?

Thanks

7 replies on this article “NRO FD Interest TDS”

  1. Ramprakash says:

    Hi

    Both my current employer and previous employer (I had switched job in Sep’11) would be issuing Form 16 around mid June. I would be filing my returns around end of June. My total interest income (over & above my salary income) is around 2.5 lac (TDS has been at 10%). I am in 20% tax bracket, which means I have to pay another 25K tax. Would it be a problem if I pay this around 3rd week of June, after I get the Form 16s and do the final calculations for filing the returns.

    I had read that there is no penalty if the tax due is upto 10k. After that it is roughly 1% per month. So in my case penalty would be around 25k-10k =15k * 1% * 3 (3 months) = Rs. 450
    Is my understanding correct?

    Thanks

  2. BanyanFA says:

    Ramprakash,
    As Ashal mentioned, TDS on NRO account is defaulted to be at 30% and you can not avoid it. Considering you are in 30% Tax bracket, please compute all your tax dues and pay your taxes asap.

    Regards
    BanyanFA

    1. Ramprakash says:

      @ BFA – “you can not avoid”… Even though the account is NRO…but my resident status in NOT NRI.. I have been in India since may 2010…so while filing my returns & paying taxes should I not calculate it at my actual overall tax bracket of 20%… or is it that since the account was categorized as NRO.. irrespective of my actual resident status I will still have to pay at 30% for the NRO Account.

      P.S. I had got the status of the bank account converted from NRO to Resident Ordinary before the maturity of FD… However the bank deducted the TDS based on the status at the time of opening the account.

      Thanks

      1. Dear Ramprakash, Tax deducted by bank is one thing & your actual tax liability is another thing. Banks are asked to TDS @ 30.9% in case of NRO accounts. Please file your ITR & before that pay your due taxes as per your slab, be it 10% or 20% or 30%.

        Thanks

        Ashal

  3. Ramprakash says:

    Thanks Ashal.

    My total tax liability will actually be more than the TDS. Only Issue is HSBC has deducted tax at 30.9% whereas all my other banks and my two employers (I had switched job) had deducted at 10%… Will I have to attach any document stating that I am not an NRI for the last FY and hence tax should be deducted as per Resident status.

    1. Dear Ramprakash, Please pay your due tax immediately to save on penalty & the penal interest.

      Thanks

      Ashal

  4. Dear Ramprakash, the TDS rate for NRIs is 30.9% & the same was applicable to you for that NRO FD. That’s why, even though you mentioned within time but some how the same was not entered in the system or for the fact that at the time of opening the FD, the same was opened as NRO, the TDS was deducted at 30.9%.

    If your total tax liability is less than the total TDS deducted from your all FDs & other sources of income, you have the option to claim refund of the excess tax paid to Govt. of India.

    Thanks

    Ashal

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