India has double tax treaty with various countries, can someone advise me how does it it work..

For eg if you keep the funds in India the TDS tax rate is 15% for canada, while for some middle east countries where there is no income tax it's between 10-12.5%.

1. If you are in 25% tax bracket in Canada, if India withholds tds @ 15%, do you have to pay the balance 10% here ?.

2. If you are living in the middle east and India charges the TDS of 12.5%, are you still not liable to pay tax as per Indian tax slab which may go more than 12.5%. Or your liability is over once you pay TDS of 12.5% if it not so what is the logic of Double tax treaty with the no income tax countries


thanks in advance


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Here is a link that will give you some idea as to the taxation. I am not sure how old or new this page is. I can tell you that it is changing next year and the Finance Minister has already proposed the same and I can give you additional information on the New Rules later. NRI's are up in arms about it already. (GOPIO)

http://www.incometaxindia.gov.in/publications/9_Income_Tax_For_NRI/Chapter011.asp
http://www.gopio.net/news.htm
http://www.gopio.net/news_latest.htm#LETTER.BLOCK26

When you leave India and start earning abroad, we send money home to a Bank account which they will call NRE ( Non Resident External) because we are sending them in Foreign Currencies from outside India.

Up to now until next year, there will be no tax on the Interest monies earned on this deposit and they do not with hold any taxes from it. So, we all are O.K.

Since you reside here in Canada, you declare the same and pay the tax rate that you fall under after calculating your taxes. Most of us will fall under the 22% - 28% Federal bracket. Then the Province will flog us for additional 50% of the Feds tax. This year they have dropped it a shade lower and might be 46-47%, I will let you know after I get my tax return ready. I am behind in my home work.

http://siadipp.nic.in/publicat/invpub/taxation.htm

For those who will have to pay taxes next year, they can claim upto Rs.1,60,000/- as per exemptions and get it back by filing a TAX Return there in India. (It is Rs.1,80,000/- for the ladies. Age is the criteria and I am looking for their website for that) Once you pay taxes there, you can claim relief there and also relief here, saying that that the taxes were levied upon it. When you get some or most of it back, I don't know how we go about reporting the same. Do we? or Don't we?. That will come next year.

That is all for now.

Freddie.

Hi Freddy

Thanks for your reply.

I am referring to NRO a/c not NRE, remember last year the rate of interest went up to 10% p.a .So if you keep the money in NRO a/c and say you live here you have to pay difference here right.

At the same token what happens those who reside in the gulf and pay no income tax, is the Indian govt going to charge only 12.5% as per the treaty?

ONLY NRI's have NRO account. The others have their 'chalu account'. The guys in India do not cry paying the taxes. What they do is give it to the elderly in the family to shelter it for them. There are enough of them to hide the interest money.

It is us, who are away, who will have to pay all of it. First at the other end, then the top up, here, after asking for due credit for the amount deducted at the Indian End. It is a double whammy. We are great, take all of the licks and keep on ticking....

The Indian Tax system can with hold 30% of the proceeds, for an example, if you invest Rs.1000/- and get Rs.100/- as interest, they can with hold Rs.30/- as taxes on it, if they come to know that it is an NRO account. They will pay part of it back to you, if you file your Income Tax for that year, before their year end. (30th April) 31stJuly.

All of this started after they started Issuing to us the PAN Numbers. They found a whopping lot of guys with oodles of dough abroad. They found that it is a Cash Cow. No brainer to milk the NRI's.

Every country is on the up and up with taxing anything that is moving. India is catching up with it. More Urpees.

Haven't seen you in a while, welcome back.

Freddie.

You watch the exchange Market, When the Rupee is down send it to the Indian End. Get whatever the best interest that you can get. Then, when the Rupee runs down, like now, get most of it back to Canada, the exchange rate takes care of every thing. It is running in cycles. And interest rate, you can't go wrong. Beats the quarter that they offer for a hundred. F