Want to stop/reduce deduction of taxes from your passive income     If you are a PIO (Person of Indian Origin) or a foreign national living abroad and have income from a country of origin like India, you have most probably rented the residential/commercial property or received interest on Fixed Deposits with Indian banks, Dividend from investments in Mutual Funds or may have consultation income from Indian company.     In case of the above transactions, the payer of the income (i.e. your tenant or your banker) has to deduct (withheld) taxes as per the provisions of Income Tax, called as TDS (Tax Deducted at Source). Generally, if your income is not too high, then you have refund due from the taxes deducted by the payer. Under the income tax the TDS, rates may be higher compared to your tax liability and while deducting the taxes the amount of basic exemption and various deductions under section 80 are not considered. The remedy here is to file tax return & ask for refund of taxes and processing of refund is not so fast in India. It is always better to pay what you owe and not more than that.     To understand the situation , let see Mr. Dipak’s case, who is NRI and a Person of India Origin (PIO), his annual Indian income includes house-rent Rs. 2,40,000/-, Interest on FCNR Fixed Deposits Rs. 1,20,000/- & Rs.1,00,000/- consultation fees for the financial year 2008-09. From this income the various payers will deduct Rs. 1,04,040/- as Income tax ( Rs. 73,440/- on rent ,Rs. 30,600/- on Consultation fees , no tax is deducted on FCNR interest as it is exempt income).     Now, we will see his actual tax liability. As he is Non Resident in India only Indian income will be taxable in India. His tax liability will be Rs. 23690/-     So, Mr. Dipak have to file tax return & claim Refund of Rs. 80,350/-. Here Mr. Dipak may make an application in Form No. 13 & get No Deduction / Deduction at low rate Certificate from Assessing Officer.     Lower rate is determined on the basis of the higher of the following rates by the ITO     1] Average rate of the current year     2] Average of the average rate of tax of preceding 3 years.     One should keep in mind that the above will help you to reduce the withholding of taxes only and dose not reduce your ultimate tax liability.     Also for the taxable interest income on bank account you may file Form 15G or 15H with the bank.     Also if the payer considers that whole sum payable to Non Resident is not chargeable to tax, he can make an application to the Assessing Officer to determine the appropriate portion of sum on which tax should be deducted.     Under Section 115G of Income tax, it shall not be necessary for a non-resident Indian to furnish under sub-section (1) of section 139 a return of his income if his total income consisted only of investment income or income by way of long-term capital gains or both and the tax has been deducted at source from such income.