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CMA Final · Direct Tax Laws and International Taxation · Interest and Fees

A non-resident (not a company) earned only the following income in the tax year: dividend of Rs 4,00,000 (not from an IFSC unit) and interest of Rs 5,00,000 from an Indian concern on a foreign-currency loan (serial number 3 of section 207(1)). Tax of Rs 1,00,000 on the dividend and Rs 1,00,000 on the interest was deducted at source at 25% and 20% respectively. Under section 207(8), is a return of income required?

No return is required. Section 207(8) excuses filing when total income consists only of income in serial numbers 1 to 7 of sub-section (1) and sub-section (2), and TDS was at a rate not less than the section 207 rates. Here TDS was 25% on dividend and 20% on interest, so the test is satisfied.

  1. ANo, as the income is only of serial numbers 1 to 7 and TDS on each was at not less than the section 207 ratesCorrect
  2. BYes, because the TDS on interest was only at the section 207 rate
  3. CYes, because total income exceeds Rs 5,00,000
  4. DNo, but only if the tax deducted was exactly equal to the rate in section 207

Explanation

Section 207(8) exempts the assessee from filing a return if total income consists only of the listed income and TDS was at a rate not less than the section 207 rates. Dividend TDS of 1,00,000 on 4,00,000 is 25%, which is at least 20%. Interest TDS of 1,00,000 on 5,00,000 is 20%, which equals the rate. Both conditions are met, so no return is required. A 'not less than' test does not require exact equality.

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