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Non-resident’s liability on bank interest

My son has both NR (E) and NR(O) deposits. I am the Power of Attorney holder. The bank without notice has deducted 30.6 per cent from interest on NR (O) account. How can I get the refund?

It is only income from Non-resident (E) deposits subscribed by way of foreign exchange, which is exempted under Sec. 10(4)(ii) of the Act. Interest from Non-resident (O) (Ordinary) deposits is not so exempted. The rate for tax deduction, where it exceeds the limit of Rs. 5,000 (now raised Rs. 10,000 from June 1, 2007) is 10 per cent. But where the payment is made to a non-resident, it should be 20 per cent . Deduction of tax at 30 per cent as applicable for other incomes was therefore not correct. The reader could have filed Form 15G on behalf of his son, if his taxable income in India did not exceed the minimum exemption limit. Where tax has been deducted, the only course is to file income tax return and claim the refund.

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