A author in India, of engineering book published by US publisher, 30% tax on royalty deducted.Is it OK?
Answer:
Thirty percent is the statutory rate of withholding tax on royalties paid to nonresidents of the United States. Technically, this tax should only be collected with respect to sales in the United States, though your publisher may lump all its sales together. If that is the case, you may be entitled to a refund of the excess withholding.
More importantly, however, the US-India income tax treaty provides for a reduction in the royalty withholding tax rate to 15% where the recipient is a resident of India. In order to obtain the benefit of this rate, you must provide the publisher with a properly completed Form W-8BEN on which you certify that you are entitled to treaty benefits. Once the publisher has received the form, it should begin withholding at the 15% rate.
You are entitled to a refund of the excess amount withheld, but you will have to file a US tax return (Form 1040-NR) after the end of the year in which the tax was withheld to claim the refund. You cannot claim a refund or credit for the excess withholding tax from your publisher.
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