............................
[ATTACH]2318[/ATTACH]
ONLY FOR NRO DEPOSITS
All NRO deposits holders are required to submit the copy of their PAN card / advise PAN number to enable the Bank to afford credit of the tax deducted to their tax account.
If it may not be possible to submit the copy, simply should advise the number by e-mail.
Further, those NRO depositors, who want to avail benefit under DTAA for current Financial Year 2010-11 are also required to submit Tax Residency Certificate and Self Declaration (as the case may be).
See the form attached:
Tax Declaration Forms for NRO Deposits
Tax Declaration Forms for NRO Deposits
Jani,
Thanks for providing the information. No doubt it will be beneficial for many NRI's. In my case every year (since 2006), bank has deducted TDS on interest payments approx INR 20,000( based on 30.9% tax rate) from my NRO accounts. I try to get back that amount by filing income tax returns and I did filed in the year 2007. After a long wait (one year) I have received the cheque and my contacts in india forget to endorse the cheque before it get deposited (drop box) into my account and bank has rejected the same. With this bad experiance I have given up filing tax retuns since then.
Murari
Thanks for providing the information. No doubt it will be beneficial for many NRI's. In my case every year (since 2006), bank has deducted TDS on interest payments approx INR 20,000( based on 30.9% tax rate) from my NRO accounts. I try to get back that amount by filing income tax returns and I did filed in the year 2007. After a long wait (one year) I have received the cheque and my contacts in india forget to endorse the cheque before it get deposited (drop box) into my account and bank has rejected the same. With this bad experiance I have given up filing tax retuns since then.
Murari
Tax Declaration Forms for NRO Deposits
murari;289156 I have received the cheque and my contacts in india forget to endorse the cheque before it get deposited (drop box) into my account and bank has rejected the same. With this bad experiance I have given up filing tax retuns since then.
So are you complaining against your contacts in India or the IT deptt.
I had received a refund cheque for my Dinlaw. She had in the meantime changed her account to Noida when she was going abroad. I just went to the ITO and explained the situation and showed him the new bank account statement and a letter from the Dinlaw. Sure enough I received a new cheque mentioning the new account number and it was deposited and got cashed.
I have recd my refund for AY 8-9.
-
RAJESH H DHRUVA
- Posts: 528
- Joined: Sat Jan 20, 2007 10:16 am
Tax Declaration Forms for NRO Deposits
Dear P_Jani,
Good wishes and and thanx for the usefulpost. However, there are certain anomalies as regards Tax Deduction at Source (TDS) / self declaration in case of residents of Middle East.
2. I am posting a copy of our presentation to The Chairman, State Bank of India, which is self-explanatory.
Best wishes.
RAJESH H DHRUVA
-----------------------------------
6th Dec.2008
Shri O.P.Bhatt,
Chairman,
State Bank of India,
Mumbai.
Dear Shri Bhatt,
Sub: Anomaly in Tax Deduction at Source (TDS) under Double Tax Treaty
While congratulating you and the team of State Bank of India for excellent Q2 results amidst very critical times, I, Rajesh H Dhruva, Chartered Accountant and an NRI Consultant, am prompted to draw your kind attention about a serious anomaly and erroneous guidance to NRI account holders from Middle-East regarding TDS at concessional rate herein.
I also had opportunities of close association with State Bank of India............................
I am forwarding herewith my notes together with copy of relevant provisions of Treaties wherein the required provisions are penned in red and State Bank of India's circular and proforma of self-declaration for your perusal.
I will be happy to provide any clarifications needed in this matter.
With regards.
Sincerely.
RAJESH H DHRUVA
Chief Executive
femaonline .com
==========================================.
TDS at concessional rate on interest on NRO deposits for residents of Oman[Middle-East ] & UAE:
I. Anomaly re concessional tax rate of TDS for residents of Oman/ Middle-East :
1. One of our client in Oman is been informed by a Branch Manager in Mumbai as regards concessional rate of tax deduction at source [ TDS ] @10.3% on interest earned on NRO deposits.
2. He has also been provided part copy of bank circular and a self declaration to be provided by the NRI NRO account holder. [ attachment 1 and 2 to this email ]
3. I believe that the intimation as regards TDS at concessional rate is offered erroneously.
4. As regards this, we would also like to draw your attention as under:
.01. India and Oman have a Double Tax Treaty wherein a resident is defined in Article 4 as an individual ?residing in contracting state i.e India and Oman ? being a person who is liable to tax in such states , i.e. India.and Oman.[Annex-1]
.02 Thus, to be covered by the definition of resident under Article 4, an NRI ?should be liable to tax in India and Oman .?
.03 SBI Circular dated 21st August, 2008 in Para 2 (attachment 2 ) refers to "NRO Customers residing in the Middle East? and furthermore such NRO account holders are to provide a self-declaration in place of tax residency certificate.
.04 It seems and is presumed that said circular is issued by State Bank of India in view of CBDT?s Circular No.734 , dated 24th Jan.,1996. [Annex - 2]
.05 If it is so or otherwise , it is important to note that said CBDT circular is not applicable to NRIs in Middle-East but ?only to Non-Resident Indians in United Arab Emirates (UAE)?.
5. We also draw your attention to the fact that earlier India-UAE Double Tax Treaty also defined a resident in similar manner to the definition of India-Oman Double Tax Treaty, wherein Article 4 defined resident as a person who was liable to tax in contracting states i.e. both India and UAE. [Annex - 4]
.02 This definition was subsequently changed in India-UAE Tax Treaty vide Notification No. 282 of 2007 with effect from 28th November, 2007. [Annex - 5]
.03 According to the latest provisions of Article 4 of Double Tax Treaty between India and UAE, an individual who is present in the UAE for a period or periods totaling in the aggregate of at least 183 days in a calendar year is to be considered resident of UAE for the purpose of. [Annex - 3]
.04 Whereas under said Article the Treaty defines an individual ?residing in India? as a person who is liable to tax in India.
.05 Therefore, presently for the purpose of applicability of Treaty , an individual in UAE is not required to be a tax resident of UAE by virtue of amended provisions of Article 4 of Double Tax Treaty between India and UAE effected vide Notification No. 282 of 2007 dated 26.11.07.[Annex - 3]
.06 Moreover even the Circular No.734 , dated 24th Jan.,1996,of Central Board of Direct Taxes [ CBDT ] provides that Non-Resident Indians who are covered by the India-UAE Tax Treaty are entitled to reduced rate of tax under Articles 10(2), 11(2) and 12(2) as regards interest or dividends on bonds and deposits with bank and companies @ 12.5 per cent on the gross amount. [Annex - 2]
.07 Whereas NRI individuals residing in Oman not being taxable entities under the Oman tax laws are not and cannot be covered by the definition of 'Tax Resident "coined under Article 4 of India-Oman Tax Treaty and therefor cannot be eligible for said concessional TDS benefit offered by State Bank of India.
6. CONCLUSION : Hence, it may be concluded that the concessional TDS offered to residents of Oman and Middle East is erroneous as the same is contrary to;
.01 Provisions of Article 4 of Double Tax Treaty between India and Oman, which requires residents of both the countries to be tax payers to be eligible for the concessions offered in the Treaty.
.02 CBDT Circular No. 734 dated 24/01/1996 refers to and applies only to the residents of UAE and;
.03 The India-Oman Tax Treaty is not amended in line with Article 4 of India-UAE Double Tax Treaty amended by Notification No. 282 dated 26/11/2007.
II. Anomaly re concessional tax rate of TDS for residents of UAE :
1. We have also gone through the format of self -declaration required by State bank of India in lieu of the tax residency certificate for extending the benefit of DTAA from NRO account holders of Middle-East which includes UAE .
2. Proforma of Self-Declaration
The proforma of self-declaration in Para 3, requires a statement to the effect of "My residential status will be that of --------------------------) (mention the name of the country) Tax Resident.
.02 Herein declaration of tax residency is not necessary for the individuals who are residents of UAE.
.03 For residents of India and UAE stay in UAE matters for the purpose of Treaty and not tax liability in UAE.
.04 Moreover the CBDT Circular is absolutely clear and accordingly the declaration should be as regards stay in UAE totaling to 183 days or more in the relevant calendar year and not tax residency of UAE as is sought in the specified format of Declaration.
3. We, therefore, suggest that the Anomaly of self-declaration seeking declaration regarding "tax residency " by UAE residents should be removed and the declaration may seek "number of days stay in UAE totaling to 183 days or more in relevant calendar year.
4. By any chance I am missing any amendment or regulation whereby NRIs across the Middle-East are subject to concessional rate of TDS I request to inform and will like to stand corrected otherwise if my suggestions are convincing, then appropriate changes may be made by way of:-
.01 Branches of State Bank of India limiting the offer of concessional tax TDS rate to residents of UAE and not entire Middle-East and .
.02 An appropriate change in self-declaration to the effect of number of days stay in UAE totaling to 183 days or more in relevant calendar year.
Copy of relevant extracts of Double Tax Treaty, copy of Notification through which change has taken place in definition of Resident in UAE in India-UAE Treaty wherein the required provisions are penned in red for your perusal., and copy of SBI Circular dated 21st August, 2008 and copy of self-declaration. are enclosed.
Encl: Relevant Provisions of Treaties/Notification:-
ANNEXURE - 1.
OMAN
AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND THE SULTANATE OF OMAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
Article 4 : Resident - 1. For the purposes of this Agreement, the term ?resident of a Contracting State? means any person who, under the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.
2. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows :
(a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests) ;
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode ;
(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national ;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.
ANNEXURE - 2.
CIRCULAR NO.734, DATED 24TH JAN., 1996.
Applicable rates of taxes under the Double Taxation Avoidance Agreement between India and the United Arab Emirates
DOUBLE TAXATION RELIEF
SECTION 90
1. It has been represented by some Non-Resident Indians in the United Arab Emirates (UAE) that the banks and the U.T.I. have been deducting tax at source on interest and dividend incomes at rates higher than those provided in the Double Taxation Avoidance Agreement between India and the United Arab Emirates . This has forced the Non-Resident Indians to seek remedy by way of refunds. It also appears that in each of such cases where refund was due and where decision on the applicability of the DTAA was involved, they had been advised to file a petition before the Authority for Advance Rulings.
2. The Board in its Circular No. 728 dated 30th October, 1995 (see Annex) have already clarified that in case of a remittance to a country with which a Double Taxation Avoidance Agreement is in force, tax should be deducted at the rates provided in the Finance Act of the relevant year or at the rates provided in the DTAA, whichever is more beneficial to the assessee.
3. Once again it is clarified that in respect of payments to be made to the Non-Resident Indians at the UAE, tax at source must be deducted at the following rates :
(i) Dividends :
(a) 5% of the gross amount of the dividends if the beneficial owner is a company which owns at least 10% of the shares of the company paying the dividends.
(b) 15% of the gross amount of the dividends in all other cases.
(ii) Interest :
(a) 5% of the gross amount of the interest if such interest is paid on a loan granted by a bank carrying on a bona fide banking business or by a similar financial institution.
(b) 12.5 % of the gross amount of the interest in all other cases.
(iii) Royalties : 10% of the gross amount.
4. It is essential that the above rates which are enshrined in the DTAA between India and the UAE are strictly adhered to so as to avoid unnecessary harassment of the taxpayers.
Circular : No. 734, dated 24-1-1996.
Annex
1. It has been represented to the Board that when making remittances of the nature of royalties and technical fees, tax is being deducted at source at the rates specified in the Finance Act of the relevant year, without taking into account the special rates for taxation of such income provided for under the Double Taxation Avoidance Agreement with the country concerned.
2. The expression rates in force has been defined in section 2(37A) of the Income-tax Act. Under sub-clause (iii) of section 2(37A), for the purposes of deduction of tax under section 195, the expression is to mean the rate or rates of income-tax specified in this behalf in the Finance Act in the relevant year or the rates of tax specified in the Double Taxation Avoidance Agreement entered into by the Central Government whichever is applicable by virtue of the provisions of section 90 of the Income-tax Act, 1961.
3. It is hereby clarified that in view of the provisions of sub-section (2) of section 90 of the Act, in the case of a remittance to a country with which a Double Taxation Avoidance Agreement is in force, the tax should be deducted at the rate provided in the Finance Act of the relevant year or at the rate provided in the DTAA, whichever is more beneficial to the assessee.
Circular : No. 728, dated 30-10-1995.
ANNEXURE - 3.
UAE
Agreement for avoidance of double taxation and the prevention of fiscal evasion with United Arab Emirates
Annexure
An agreement between the Government of the Republic of India and The Government of the United Arab Emirates for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital
ARTICLE 4 - Resident - 1. For the purposes of this Agreement the term ?resident of a Contracting State ? means:
(a) in the case of India: any person who, under the laws of India, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. This term, however, does not include any person who is liable to tax in India in respect only of income from sources in India ; and
(b) in the case of the United Arab Emirates: an individual who is present in the UAE for a period or periods totaling in the aggregate at least 183 days in the calendar year concerned, and a company which is incorporated in the UAE and which is managed and controlled wholly in UAE.
2. For the purposes of paragraph 1:
(a) The Republic of India , its political sub-divisions or local authority thereof shall be deemed to be resident of the Republic of India ;
(b) The United Arab Emirates and its political sub-divisions or local Governments shall be deemed to be resident of the United Arab Emirates ;
(c) Government institutions shall be deemed, according to affiliation, to be resident of the Republic of India or the United Arab Emirates . Any institution shall be deemed to be a Government institution which has been created by the Government of one of the Contracting States or of its political sub-divisions or local authority/Governments, which are wholly owned and controlled directly or indirectly by the Government of the Contracting State or political sub-division or local authority/Governments which are recognized as such by mutual agreement of the competent authorities of the Contracting States.
(d) For the purposes of this article, Abu Dhabi Investment Authority is recognized as a resident of the United Arab Emirates .
3. Where by reason of the provisions of paragraph (1), an individual is a resident of both Contracting State , then his status shall be determined as follows :
(a) he shall be deemed to be resident of the State in which he has a permanent home available to him ; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests) ;
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in either of them, he shall be deemed to be a resident of the State of which he is a national ;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
4. Where by reason of the provisions of paragraph (1), a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.
ANNEXURE - 4.
UAE
Agreement for avoidance of double taxation and the prevention of fiscal evasion with United Arab Emirates
Annexure
An agreement between the Government of the Republic of India and The Government of the United Arab Emirates for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital
ARTICLE 4 - Resident - 1. For the purposes of this Agreement the term ?resident of a Contracting State ? means any person who, under the laws of that state, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.
2. Where by reason of the provisions of paragraph (1), an individual is a resident of both Contracting State , then his status shall be determined as follows :
(a) he shall be deemed to be resident of the State in which he has a permanent home available to him ; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests) ;
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in either of them, he shall be deemed to be a resident of the State of which he is a national ;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph (1), a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.
ANNEXURE - 5.
INDIA AND THE GOVERNMENT OF THE UNITED ARAB EMIRATES ?
AMENDMENT
NOTIFICATION NO. 282 OF 2007, DT. 28TH NOV., 2007
28 / 11 /2007
Double Taxation Avoidance Agreement between the Government of the Republic of India and the Government of the United Arab Emirates ? Amendment
ANNEXURE
PROTOCOL AMENDING THE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNITED ARAB EMIRATES FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME SIGNED IN INDIA ON 29TH APRIL 1992
ARTICLE 1
Paragraph 1 of article 4 (Resident) shall be replaced by the following:
?1. For the purpose of this Agreement the term ?resident of a Contracting States? means:
(a) in case of India: any person who, under the laws of India, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. This term, however does not include any person who is liable to tax in India in respect only of income from source in India; and
(b) in the case of United Arab Emirates: an individual who is present in the UAE for a period or periods totaling in the aggregate at least 183 days in the calendar year concerned, and a company which is incorporated in the UAE and which is managed and controlled wholly in UAE.
2. For the purposes of paragraph 1 :
(a) The Republic of India, its political sub division or local authority thereof shall be deemed to be resident of the Republic of India;
(b) The United Arab Emirates and its political sub divisions or local Governments shall be deemed to be resident of the United Arab Emirates;
(c) Government institutions shall be deemed, according to affiliation, to be resident of the Republic of India or the United Arab Emirates. Any institution shall be deemed to be a Government institution which has been created by the Government of one of the Contracting States or of its political sub division or local authority / Governments, which are wholly owned and controlled directly or indirectly by the Government of the Contracting State or political sub division or local authority / Governments which are recognized as such by mutual agreement of the competent authorities of the Contracting States.
(d) For the purposes of this article, Abu Dhabi Investment Authority is recognized as a resident of the United Arab Emirates.?
Good wishes and and thanx for the usefulpost. However, there are certain anomalies as regards Tax Deduction at Source (TDS) / self declaration in case of residents of Middle East.
2. I am posting a copy of our presentation to The Chairman, State Bank of India, which is self-explanatory.
Best wishes.
RAJESH H DHRUVA
-----------------------------------
6th Dec.2008
Shri O.P.Bhatt,
Chairman,
State Bank of India,
Mumbai.
Dear Shri Bhatt,
Sub: Anomaly in Tax Deduction at Source (TDS) under Double Tax Treaty
While congratulating you and the team of State Bank of India for excellent Q2 results amidst very critical times, I, Rajesh H Dhruva, Chartered Accountant and an NRI Consultant, am prompted to draw your kind attention about a serious anomaly and erroneous guidance to NRI account holders from Middle-East regarding TDS at concessional rate herein.
I also had opportunities of close association with State Bank of India............................
I am forwarding herewith my notes together with copy of relevant provisions of Treaties wherein the required provisions are penned in red and State Bank of India's circular and proforma of self-declaration for your perusal.
I will be happy to provide any clarifications needed in this matter.
With regards.
Sincerely.
RAJESH H DHRUVA
Chief Executive
femaonline .com
==========================================.
TDS at concessional rate on interest on NRO deposits for residents of Oman[Middle-East ] & UAE:
I. Anomaly re concessional tax rate of TDS for residents of Oman/ Middle-East :
1. One of our client in Oman is been informed by a Branch Manager in Mumbai as regards concessional rate of tax deduction at source [ TDS ] @10.3% on interest earned on NRO deposits.
2. He has also been provided part copy of bank circular and a self declaration to be provided by the NRI NRO account holder. [ attachment 1 and 2 to this email ]
3. I believe that the intimation as regards TDS at concessional rate is offered erroneously.
4. As regards this, we would also like to draw your attention as under:
.01. India and Oman have a Double Tax Treaty wherein a resident is defined in Article 4 as an individual ?residing in contracting state i.e India and Oman ? being a person who is liable to tax in such states , i.e. India.and Oman.[Annex-1]
.02 Thus, to be covered by the definition of resident under Article 4, an NRI ?should be liable to tax in India and Oman .?
.03 SBI Circular dated 21st August, 2008 in Para 2 (attachment 2 ) refers to "NRO Customers residing in the Middle East? and furthermore such NRO account holders are to provide a self-declaration in place of tax residency certificate.
.04 It seems and is presumed that said circular is issued by State Bank of India in view of CBDT?s Circular No.734 , dated 24th Jan.,1996. [Annex - 2]
.05 If it is so or otherwise , it is important to note that said CBDT circular is not applicable to NRIs in Middle-East but ?only to Non-Resident Indians in United Arab Emirates (UAE)?.
5. We also draw your attention to the fact that earlier India-UAE Double Tax Treaty also defined a resident in similar manner to the definition of India-Oman Double Tax Treaty, wherein Article 4 defined resident as a person who was liable to tax in contracting states i.e. both India and UAE. [Annex - 4]
.02 This definition was subsequently changed in India-UAE Tax Treaty vide Notification No. 282 of 2007 with effect from 28th November, 2007. [Annex - 5]
.03 According to the latest provisions of Article 4 of Double Tax Treaty between India and UAE, an individual who is present in the UAE for a period or periods totaling in the aggregate of at least 183 days in a calendar year is to be considered resident of UAE for the purpose of. [Annex - 3]
.04 Whereas under said Article the Treaty defines an individual ?residing in India? as a person who is liable to tax in India.
.05 Therefore, presently for the purpose of applicability of Treaty , an individual in UAE is not required to be a tax resident of UAE by virtue of amended provisions of Article 4 of Double Tax Treaty between India and UAE effected vide Notification No. 282 of 2007 dated 26.11.07.[Annex - 3]
.06 Moreover even the Circular No.734 , dated 24th Jan.,1996,of Central Board of Direct Taxes [ CBDT ] provides that Non-Resident Indians who are covered by the India-UAE Tax Treaty are entitled to reduced rate of tax under Articles 10(2), 11(2) and 12(2) as regards interest or dividends on bonds and deposits with bank and companies @ 12.5 per cent on the gross amount. [Annex - 2]
.07 Whereas NRI individuals residing in Oman not being taxable entities under the Oman tax laws are not and cannot be covered by the definition of 'Tax Resident "coined under Article 4 of India-Oman Tax Treaty and therefor cannot be eligible for said concessional TDS benefit offered by State Bank of India.
6. CONCLUSION : Hence, it may be concluded that the concessional TDS offered to residents of Oman and Middle East is erroneous as the same is contrary to;
.01 Provisions of Article 4 of Double Tax Treaty between India and Oman, which requires residents of both the countries to be tax payers to be eligible for the concessions offered in the Treaty.
.02 CBDT Circular No. 734 dated 24/01/1996 refers to and applies only to the residents of UAE and;
.03 The India-Oman Tax Treaty is not amended in line with Article 4 of India-UAE Double Tax Treaty amended by Notification No. 282 dated 26/11/2007.
II. Anomaly re concessional tax rate of TDS for residents of UAE :
1. We have also gone through the format of self -declaration required by State bank of India in lieu of the tax residency certificate for extending the benefit of DTAA from NRO account holders of Middle-East which includes UAE .
2. Proforma of Self-Declaration
The proforma of self-declaration in Para 3, requires a statement to the effect of "My residential status will be that of --------------------------) (mention the name of the country) Tax Resident.
.02 Herein declaration of tax residency is not necessary for the individuals who are residents of UAE.
.03 For residents of India and UAE stay in UAE matters for the purpose of Treaty and not tax liability in UAE.
.04 Moreover the CBDT Circular is absolutely clear and accordingly the declaration should be as regards stay in UAE totaling to 183 days or more in the relevant calendar year and not tax residency of UAE as is sought in the specified format of Declaration.
3. We, therefore, suggest that the Anomaly of self-declaration seeking declaration regarding "tax residency " by UAE residents should be removed and the declaration may seek "number of days stay in UAE totaling to 183 days or more in relevant calendar year.
4. By any chance I am missing any amendment or regulation whereby NRIs across the Middle-East are subject to concessional rate of TDS I request to inform and will like to stand corrected otherwise if my suggestions are convincing, then appropriate changes may be made by way of:-
.01 Branches of State Bank of India limiting the offer of concessional tax TDS rate to residents of UAE and not entire Middle-East and .
.02 An appropriate change in self-declaration to the effect of number of days stay in UAE totaling to 183 days or more in relevant calendar year.
Copy of relevant extracts of Double Tax Treaty, copy of Notification through which change has taken place in definition of Resident in UAE in India-UAE Treaty wherein the required provisions are penned in red for your perusal., and copy of SBI Circular dated 21st August, 2008 and copy of self-declaration. are enclosed.
Encl: Relevant Provisions of Treaties/Notification:-
ANNEXURE - 1.
OMAN
AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND THE SULTANATE OF OMAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
Article 4 : Resident - 1. For the purposes of this Agreement, the term ?resident of a Contracting State? means any person who, under the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.
2. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows :
(a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests) ;
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode ;
(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national ;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.
ANNEXURE - 2.
CIRCULAR NO.734, DATED 24TH JAN., 1996.
Applicable rates of taxes under the Double Taxation Avoidance Agreement between India and the United Arab Emirates
DOUBLE TAXATION RELIEF
SECTION 90
1. It has been represented by some Non-Resident Indians in the United Arab Emirates (UAE) that the banks and the U.T.I. have been deducting tax at source on interest and dividend incomes at rates higher than those provided in the Double Taxation Avoidance Agreement between India and the United Arab Emirates . This has forced the Non-Resident Indians to seek remedy by way of refunds. It also appears that in each of such cases where refund was due and where decision on the applicability of the DTAA was involved, they had been advised to file a petition before the Authority for Advance Rulings.
2. The Board in its Circular No. 728 dated 30th October, 1995 (see Annex) have already clarified that in case of a remittance to a country with which a Double Taxation Avoidance Agreement is in force, tax should be deducted at the rates provided in the Finance Act of the relevant year or at the rates provided in the DTAA, whichever is more beneficial to the assessee.
3. Once again it is clarified that in respect of payments to be made to the Non-Resident Indians at the UAE, tax at source must be deducted at the following rates :
(i) Dividends :
(a) 5% of the gross amount of the dividends if the beneficial owner is a company which owns at least 10% of the shares of the company paying the dividends.
(b) 15% of the gross amount of the dividends in all other cases.
(ii) Interest :
(a) 5% of the gross amount of the interest if such interest is paid on a loan granted by a bank carrying on a bona fide banking business or by a similar financial institution.
(b) 12.5 % of the gross amount of the interest in all other cases.
(iii) Royalties : 10% of the gross amount.
4. It is essential that the above rates which are enshrined in the DTAA between India and the UAE are strictly adhered to so as to avoid unnecessary harassment of the taxpayers.
Circular : No. 734, dated 24-1-1996.
Annex
1. It has been represented to the Board that when making remittances of the nature of royalties and technical fees, tax is being deducted at source at the rates specified in the Finance Act of the relevant year, without taking into account the special rates for taxation of such income provided for under the Double Taxation Avoidance Agreement with the country concerned.
2. The expression rates in force has been defined in section 2(37A) of the Income-tax Act. Under sub-clause (iii) of section 2(37A), for the purposes of deduction of tax under section 195, the expression is to mean the rate or rates of income-tax specified in this behalf in the Finance Act in the relevant year or the rates of tax specified in the Double Taxation Avoidance Agreement entered into by the Central Government whichever is applicable by virtue of the provisions of section 90 of the Income-tax Act, 1961.
3. It is hereby clarified that in view of the provisions of sub-section (2) of section 90 of the Act, in the case of a remittance to a country with which a Double Taxation Avoidance Agreement is in force, the tax should be deducted at the rate provided in the Finance Act of the relevant year or at the rate provided in the DTAA, whichever is more beneficial to the assessee.
Circular : No. 728, dated 30-10-1995.
ANNEXURE - 3.
UAE
Agreement for avoidance of double taxation and the prevention of fiscal evasion with United Arab Emirates
Annexure
An agreement between the Government of the Republic of India and The Government of the United Arab Emirates for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital
ARTICLE 4 - Resident - 1. For the purposes of this Agreement the term ?resident of a Contracting State ? means:
(a) in the case of India: any person who, under the laws of India, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. This term, however, does not include any person who is liable to tax in India in respect only of income from sources in India ; and
(b) in the case of the United Arab Emirates: an individual who is present in the UAE for a period or periods totaling in the aggregate at least 183 days in the calendar year concerned, and a company which is incorporated in the UAE and which is managed and controlled wholly in UAE.
2. For the purposes of paragraph 1:
(a) The Republic of India , its political sub-divisions or local authority thereof shall be deemed to be resident of the Republic of India ;
(b) The United Arab Emirates and its political sub-divisions or local Governments shall be deemed to be resident of the United Arab Emirates ;
(c) Government institutions shall be deemed, according to affiliation, to be resident of the Republic of India or the United Arab Emirates . Any institution shall be deemed to be a Government institution which has been created by the Government of one of the Contracting States or of its political sub-divisions or local authority/Governments, which are wholly owned and controlled directly or indirectly by the Government of the Contracting State or political sub-division or local authority/Governments which are recognized as such by mutual agreement of the competent authorities of the Contracting States.
(d) For the purposes of this article, Abu Dhabi Investment Authority is recognized as a resident of the United Arab Emirates .
3. Where by reason of the provisions of paragraph (1), an individual is a resident of both Contracting State , then his status shall be determined as follows :
(a) he shall be deemed to be resident of the State in which he has a permanent home available to him ; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests) ;
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in either of them, he shall be deemed to be a resident of the State of which he is a national ;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
4. Where by reason of the provisions of paragraph (1), a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.
ANNEXURE - 4.
UAE
Agreement for avoidance of double taxation and the prevention of fiscal evasion with United Arab Emirates
Annexure
An agreement between the Government of the Republic of India and The Government of the United Arab Emirates for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital
ARTICLE 4 - Resident - 1. For the purposes of this Agreement the term ?resident of a Contracting State ? means any person who, under the laws of that state, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.
2. Where by reason of the provisions of paragraph (1), an individual is a resident of both Contracting State , then his status shall be determined as follows :
(a) he shall be deemed to be resident of the State in which he has a permanent home available to him ; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests) ;
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in either of them, he shall be deemed to be a resident of the State of which he is a national ;
(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph (1), a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.
ANNEXURE - 5.
INDIA AND THE GOVERNMENT OF THE UNITED ARAB EMIRATES ?
AMENDMENT
NOTIFICATION NO. 282 OF 2007, DT. 28TH NOV., 2007
28 / 11 /2007
Double Taxation Avoidance Agreement between the Government of the Republic of India and the Government of the United Arab Emirates ? Amendment
ANNEXURE
PROTOCOL AMENDING THE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNITED ARAB EMIRATES FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME SIGNED IN INDIA ON 29TH APRIL 1992
ARTICLE 1
Paragraph 1 of article 4 (Resident) shall be replaced by the following:
?1. For the purpose of this Agreement the term ?resident of a Contracting States? means:
(a) in case of India: any person who, under the laws of India, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. This term, however does not include any person who is liable to tax in India in respect only of income from source in India; and
(b) in the case of United Arab Emirates: an individual who is present in the UAE for a period or periods totaling in the aggregate at least 183 days in the calendar year concerned, and a company which is incorporated in the UAE and which is managed and controlled wholly in UAE.
2. For the purposes of paragraph 1 :
(a) The Republic of India, its political sub division or local authority thereof shall be deemed to be resident of the Republic of India;
(b) The United Arab Emirates and its political sub divisions or local Governments shall be deemed to be resident of the United Arab Emirates;
(c) Government institutions shall be deemed, according to affiliation, to be resident of the Republic of India or the United Arab Emirates. Any institution shall be deemed to be a Government institution which has been created by the Government of one of the Contracting States or of its political sub division or local authority / Governments, which are wholly owned and controlled directly or indirectly by the Government of the Contracting State or political sub division or local authority / Governments which are recognized as such by mutual agreement of the competent authorities of the Contracting States.
(d) For the purposes of this article, Abu Dhabi Investment Authority is recognized as a resident of the United Arab Emirates.?
Tax Declaration Forms for NRO Deposits
Here is a LATEST PDF ( Adobe ) document from ICICI bank,
advising of Taxation, for NRIs
link here
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advising of Taxation, for NRIs
link here
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Tax Declaration Forms for NRO Deposits
P_Jani;313248Here is a LATEST PDF ( Adobe ) document from ICICI bank,
advising of Taxation, for NRIs
................
Thanks for the '2010-Self Declaration-NRO-DTAA.doc'. Will it be sufficient to send that to the bank? ICICI asks for 'proof of residency' document - I have been unsuccessful in getting my CPA to issue one to me. Can anyone advise on what they provided as 'proof of residency' document for ICICI?
"Important note- Benefit of DTAA can be availed only if NRI has submitted valid PAN details, proof of residency and other documents as prescribed within specified time."
Tax Declaration Forms for NRO Deposits
If my understanding is correct, you have to file both TaxResidency form (must for any NRO account) and Self-declaration form(varies with individual bank) every calendar year. You can get TaxResidency form from http://www.irs.gov/newsroom/article/0,,id=123818,00.html. Fill and submit Form 8802 (you can see a link to it at the bottom of that page). It costs $35 and can increase annually! So anyone worried about this extra fee every year and these procedures, should stay away from opening an NRO account. I am pondering over opening an NRO account due to this fee and filing them religiously every year.
--Srivai
--Srivai