Tortola taxes your pay, not your Indian savings.

Where it works differently

Service is under 5 years

Four components are taxed separately: employer contribution and its interest as salary, employee contribution previously claimed under 80C reversed, and interest on employee contribution as other sources.

Rule 8 of Part A of the Fourth Schedule.

Employment ended for reasons beyond the employee's control

The 5-year condition is relaxed.

Proviso to Rule 8.

The account is inoperative

Interest continues to accrue and is taxable once the member leaves service.

Settled position; a live issue for NRIs with dormant accounts.

Commonly got wrong

• EPF withdrawal is always tax-free. Only after 5 years of continuous service.An EPF withdrawal is tax-free only after five years of continuous service. Below five years, four separate components become taxable in different heads.

Where it works differently

The member is an NRI with a dormant account

Interest continues to accrue, and an account becomes inoperative after 36 months without contribution, at which point the interest is taxable in India.

EPF Scheme rules plus settled tax treatment.

The member has left India

Indian tax on that interest still applies as India-sourced income, and the residence country may tax it too.

s.9 read with the relevant treaty.

Commonly got wrong

• All EPF interest is tax-free. Interest on employee contributions above Rs 2.5 lakh a year has been taxable since FY 2021-22.Interest is tax-free up to Rs 2.5 lakh of employee contribution a year (Rs 5 lakh where the employer does not contribute). Above that it is taxable.

Where it works differently

The gain is short-term

TDS is at the applicable slab rate, effectively 30% plus surcharge and cess for most NRI sellers.

s.195 requires deduction at 'rates in force' for the actual character of the income.

No lower-deduction certificate is obtained

TDS applies to the ENTIRE SALE CONSIDERATION, not to the gain.

s.195 operates on the sum paid unless the AO determines otherwise. This is the whole commercial case for Form 13 / Form 128.

There are joint NRI sellers

TDS is deducted separately against each seller's PAN in their ownership proportion.

Rule 37BA. Deducting entirely against one PAN strands the other's credit.

The buyer deducts 1% under s.194-IA

Wrong section. The buyer becomes an assessee-in-default under s.201 for the shortfall plus 1% per month interest and penalty under s.271C.

s.194-IA applies only where the seller is a RESIDENT.

Commonly got wrong

• TDS on property purchase is 1% over Rs 50 lakh. That is s.194-IA, for RESIDENT sellers only. For a non-resident seller it is s.195 at the full capital-gains rate, with no threshold.1% applies only if the seller is a resident. NRI seller means s.195 at 12.5% plus surcharge and cess on the whole consideration unless a certificate is obtained.
• The buyer files Form 26QB. 26QB (Form 141 from 1 April 2026) was for s.194-IA resident sellers. Until 30 September 2026 an NRI-seller purchase needed a TAN and Form 27Q (Form 144 from 1 April 2026). From 1 October 2026 a resident individual or HUF buyer uses Form 141's new Schedule E against their PAN, but still deducts at the s.195 / s.393(2) rate, not 1%.Buying from an NRI, you deduct at the full capital-gains rate, not 1%. If you pay on or after 1 October 2026 and you are a resident individual or HUF, you report it on Form 141 Schedule E against your PAN and give the seller Form 132; no TAN is needed. Payments before that date needed a TAN and Form 27Q or Form 144.

Where it works differently

A valid TRC and Form 10F (Form 41 from 1 Apr 2026) are furnished

The treaty rate applies, commonly 10-15% under Article 11.

s.90(2) gives the more beneficial of treaty or Act.

No PAN is furnished

s.206AA imposes at least 20%, but Rule 37BC allows escape by furnishing name, address, TIN and TRC. Courts have also held s.206AA cannot override a treaty rate.

Rule 37BC + settled case law.

Claiming the treaty rate at source

The s.115A(5) filing exemption is lost, so an Indian return becomes necessary.

That exemption requires TDS at not less than the s.115A rate.

The account is NRE instead

NRE interest is exempt only while the individual meets the FEMA residence-outside-India condition or is permitted by RBI to maintain the account, and the account is maintained in accordance with the applicable FEMA rules. Income-tax non-resident or RNOR status alone does not establish this exemption.

Income-tax Act 2025 Schedule IV, entry 1 (retaining the earlier s.10(4)(ii) conditions): https://www.incometaxindia.gov.in/w/schedule-iv-4

The deposit is FCNR instead

The exemption covers interest from a qualifying foreign-currency deposit with a scheduled bank whose acceptance of the deposit is approved by RBI, paid to a non-resident or a resident but not ordinarily resident (RNOR) under income-tax law. Check the deposit and residence conditions; FEMA non-residence alone does not establish the FCNR exemption.

Income-tax Act 2025 Schedule IV, entry 14 preserves s.10(15)(iv)(fa) subject to its conditions: https://www.incometaxindia.gov.in/w/schedule-iv-4 ; underlying conditions: https://www.incometaxindia.gov.in/w/section-10-62

Commonly got wrong

• NRO interest TDS is 30%. Incomplete. Surcharge and 4% cess sit on top, so the effective rate is higher.30% plus surcharge and cess, around 31.2% at the base level.
• You can file Form 15G/15H to stop NRO TDS. Those are resident-only declarations. An NRI filing one makes a false declaration.Use Form 13 (Form 128 from 1 April 2026), or claim the treaty rate with a TRC.