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New TDS guidelines

Important: New guidelines regarding TDS deduction on the interest earned in NRO deposits and cash withdrawals from NRO/NRE accounts by non-resident

The withholding tax rates for interest earned on NRO savings bank account and Deposits of non-resident customers will be as under:

 

Total Interest Earned on NRO Deposits and SB accounts Withholding tax rate%
Less than or equal to ₹ 50 lakhs
31.2% (tax rate @ 30%+surcharge 0% + cess 4%)
Greater than ₹ 50 lakhs and less than or equal to 1 Cr
34.32% (tax rate @ 30%+surcharge 10% + cess 4%)
Greater than 1 Crore and less than or equal to 2 Crores
35.88% (tax rate @ 30%+surcharge 15% + cess 4%)
Above 2 Crores*
39% (tax rate@30% + surcharge 25% + cess 4%)

 

*From financial year 2023-24, the default regime is new regime basis which the above rates has been given. If the non-resident customer is opting for old regime and declaring the same to the Bank, the tax rates above 5 crores will be 42.74% (tax rate@30% + surcharge 37% + cess 4%). In absence of declaration, it will be considered that the non-resident is opting for new regime and accordingly, tax will be deducted.

 

Any interest paid / accrued will be subject to the above mentioned withholding tax rates. 

The withholding tax rates for cash withdrawals from NRO/NRE account of non-resident customers as per section 194N will be as under : 

 

TDS applicability criteria Threshold in FY TDS rate
PAN updated and ITR Return filed Rs 1 crore 2.60% above Rs 1 crore (tax rate 2% + surcharge 25% + cess 4%)
PAN updated but ITR not filed Rs 20 lakh 2.60% above Rs 20 lakhs (tax rate 2% + surcharge 25% + cess 4%)
Rs 1 Crore 6.50% above Rs. 1 crore (tax rate 5% + surcharge 25% + cess 4%)
PAN not updated Rs 20 lakh 20% above Rs 20 lakh
PAN-Aadhaar not linked Rs 20 lakh 20% above Rs 20 lakh

 

If PAN-Aadhaar is not linked, PAN will be considered as inoperative and consequently higher rates of taxes as per section 206AA of the Act will be applicable as above from July 01, 2023.

 

As per CBDT notification 53 of 2022, if there is cash deposit or cash withdrawal aggregating to Rs. 20 lakhs and above from one or more accounts during a financial year or opening of current or cash credit account, PAN or Aadhaar should be updated in the account. In absence of PAN or Aadhaar updated in account, above transaction will not be allowed. 

 

Click Here - FAQ NRI Pan Aadhaar Linkage

 

Disclaimer: The tax write up above is for the general understanding and reference. The user needs to verify all the facts, law and contents with the text of the prevailing statutes and seek appropriate professional advice before acting on the basis of any information contained herein as the taxation implications may vary depending upon the facts in each case/interpretation by tax authorities and the tax laws are subject to change from time to time. ICICI Bank Ltd expressly disclaims any liability to any person, in respect of anything done or omitted to be done by any such person by placing reliance upon the contents of this write-up.