Clarification on Section 196A in The Income- Tax Act, 1995
I am NRI and made MF investment from my NRE (External) account. So I am exempted from Income tax as per sub-section (2) of the above section 196A. Please confirm.
Please clarify on sub-section (2) for the words "......no deduction of tax shall be made from any income payable in respect of units of the Unit Trust of India to a non- resident Indian or a non- resident Hindu undivided family, where the units have been acquired from the Unit Trust of India out of the funds in a Non- resident (External) Account......"
Full description is as given below:
Section 196A in The Income- Tax Act, 1995
196A. 1 Income in respect of units of non- residents,
(1) Any person responsible for paying to a non- resident, not being a company, or to a foreign company, any income in respect of units of a Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of India shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income- tax thereon at the rate of twenty per cent.
(2) Notwithstanding anything contained in sub- section (1), no deduction of tax shall be made from any income payable in respect of units of the Unit Trust of India to a non- resident Indian or a non- resident Hindu undivided family, where the units have been acquired from the Unit Trust of India out of the funds in a Non- resident (External) Account maintained with any bank in India or by remittance of funds in foreign currency, in accordance, in either case, with the provisions of' the Foreign Exchange Regulation Act, 1973 (46 of 1973 ), and the rules made thereunder.