Section 196A - Income in respect of units of non-residents

Withholding on non-resident mutual fund income applies unless a lower treaty rate is certified; limited UTI purchase exemption.

Section 196A requires persons paying income in respect of units of specified mutual funds to non-residents or foreign companies to deduct tax at the statutory withholding rate at the time of credit or payment, with withholding at a lower treaty rate where an applicable treaty and certificate apply. Crediting to any account, including suspense accounts, is deemed credit to the payee. An exemption applies for Unit Trust of India units purchased by NRIs or resident HUFs from NRE accounts or by foreign currency remittance compliant with FEMA.