Tax deduction on Interest earned by banks in India (TDS)

Q: Dear Sir,

I working Abu Dhabi and have the above account in India. Bank will deduct any amount I have no PAN CARD? If yes what will be the percentage?

Kindly give all the information.

Thanks with Best Regards,

Suresh

A: I assume you are referring to NRE Account in India. There should be nothing deducted from your account even if you have no PAN CARD as from NRE accounts no Tax (TDS) is deducted.

NRO Account TDS

On the other hand NRO accounts require TDS to be deducted on the interest earned. TDS is deducted @30% on interest earned on NRO deposits. NRO (savings & term deposit) accounts will attract TDS. Depending on the amount of interest earned on NRO accounts a surcharge can also apply taking the TDS up to 33.99%

This may come as a surprise to many NRIs having NRO accounts that they pay out about 30% of the interest money they earn from their Indian Banks NRO accounts.

The majority of these people probably could get some or perhaps even all their TDS paid back by filing tax returns in India and claiming a refund. However most don't bother.

Withdraw money form Bank after account holders demise

Q: Dear Mr Chand,

My mother was a retired school teacher, and her pension was made available through a State Bank of India account. Upon her death my father was beneficiary, as her nominee. However he neglected to nominate anyone as a nominee, and since his death (intestate) I have been unable to retrieve the funds in that SBI account. I am a POI and each return trip to India I have been given the run around. Do letters to top managers elicit a response? Could you please advise what options are available to me.

Regards,
NS

A: In the absence of a proper named nominee, Banks usually will not release the account proceeds without insisting upon a Succession Certificate, Letter of Administration or Court Order.

No bank official will take responsibility for releasing funds as problems can arise sometimes even amongst other members of the family over disputes on the sharing of funds etc. Your options, I believe are limited to getting a succession certificate and/or speaking to a lawyer.

How to Get a Succession Certificate in India

Perhaps the right way to go about this would be by consulting a lawyer. Here is a brief explanation of what is involved in getting a succession certificate.

1. Application is made in the court where the property is situated.

2. Your application should list the names of ALL the heirs. Usually, notices have to be sent to those who may have an interest in this and sometimes even a newspaper notice is required.

3. There is a time period given (say two months approximately) for any objections to be filled. You may also have to provide no objection certificate from other family members if they exist.

4. Once the court feels that everything is in order and there are no disputes, the court may pass an order for the issuance of succession certificate

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Repatriate Funds from Sale of Property

Q: Dear Sir,

I wonder if you can help me with some information regarding repatriation of funds from NRO accounts.

I have an NRO account in Delhi but live and work in London. I sold my property last year and deposited the funds in SBI in an NRO account.

I understand that I can repatriate upto 1M dollars of the sale proceeds and must complete formalities by way of a CA certificate and completion of a letter of undertaking. All taxes have been paid.

Please could you explain in detail what the undertaking is? Who issues the form for undertaking and who fills it in? Is it on Judicial stamp paper?

Please advise as the bank are being very unhelpful and do not see to know the process involved and my CA has not done this before. In fact no one seems to know any details about this process!

Many thanks

Haley Seresht

A: The undertaking is given by the person sending the funds out and the CA issues the required certificate on the prescribed form. You can view a sample of both these documents HERE

Repatriating funds from the sale of property held by NRIs has some conditions attached also.  A lot depends on how the property was acquired initially, where the funds to buy the property were sent from, was the property acquired by inheritance etc. Even how long you have owned the property can make a difference when it comes to repatriation. Find an accountant who can advise you correctly on this topic.