Section 196A - TDS on income in respect of units of non-resident

TDS on non-resident mutual fund income: tax deducted at the prescribed rate, lower treaty rate applies with TRC.

Section 196A requires withholding on income in respect of mutual fund units payable to non-residents or foreign companies, with tax deducted at the time of credit or payment. The domestic withholding rate applies with surcharge and cess; if a tax treaty applies and the payee provides a valid tax residency certificate, withholding is at the lower treaty rate. Exemption: no deduction on Unit Trust of India units purchased from NRE accounts or by permitted foreign remittance under the Foreign Exchange Management Act, 1999.