NRI Income Tax

Querist : Anonymous (Querist) 16 November 2010 This query is : Resolved
I have a question about the India Canada DTAA. Article 11 section 3(a)(i) of the DTAA appears to make interest given by Income Tax India to a Canadian NRI tax free in India. Please let me know if I am correct. Thank you.

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A V Vishal (Expert) 16 November 2010
YOUR QUERY IS NOT CLEAR TO THE EXTENT FROM WHOM THE INTEREST IS RECEIVED

A V Vishal (Expert) 16 November 2010
(a) interest arising in a Contracting State and paid to a resident of the other Contracting State shall be exempt from tax in the first-mentioned State if :

(i) the payer of the interest is the Government of that Contracting State or of a political sub-division or local authority thereof;

IT MEANS INTEREST RECEIVED ON GOVERNMENT BONDS/INSTRUMENTS ONLY.

s.subramanian (Expert) 16 November 2010
Yes. Mr.Vishal is right.

Querist : Anonymous (Querist) 16 November 2010
But what about refund interest payed by the Income Tax Dept. India in case of late processing of the refund to an NRI living in Canada? I believe that still falls within the parameters as the actual wording of the law DO NOT limit it to government bonds or instruments only.

A V Vishal (Expert) 16 November 2010
It is a debateable matter

A V Vishal (Expert) 16 November 2010
Refer Art 10 (4) of the DTAA wherein The term ‘interest’ as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income assimilated to income from money lent by the taxation laws of the State in which the income arises.

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