Following documents are mandatorily required to be submitted by a NRI:
- Tax Residency Certificate (TRC) from the Government of his country of Residence
- Form 10F as per Income Tax Rules (in certain cases)
- Declaration to the payer that the payee is eligible to claim DTAA benefit
- PAN copy
- Passport copy
- Other document if any, required by the payer
Key Points to be kept in mind:
i. The responsibility on the payer to deduct tax is only when the payment is in the nature of ‘income’ in the hands of the payee.
ii. Income of NRIs will be subject to TDS even if it is below the Basic Exemption Limit in the relevant FY.
iii. The Deductor of TDS should keep in mind the specific time-limit and various due dates for deducting TDS and filing TDS returns respectively. The Deductor may be liable to pay interest and penalty on account of such default.
iv. The NRI has to mandatorily file his Return of Income in India within the prescribed due dates for the FY in which the TEC is obtained.
v. As per the provisions of section 90 (2) of the Act, it is clear that NRIs have an option of choosing to be governed either by the provisions of a particular DTAA or the Act, whichever is more beneficial to the NRI.
vi. Following remedies may be kept in mind in case of excess tax deduction:
- Claim Credit of such excess taxes in the country of Residence.
- File Return of Income in India and claim Refund of such excess taxes.