"Tax Rules for NRIs: NRE, NRO & FCNR Accounts"

NRIs earning interest from Indian bank accounts face different tax implications: NRE and FCNR account interest is tax-free, while NRO account interest is taxable at 30% TDS. Tax benefits include exemptions under relevant sections of the Income Tax Act and potential relief through DTAA agreements.


Tax Implications for NRIs Earning Interest from Indian Bank Accounts

Non-Resident Indians (NRIs) earning interest income from Indian bank accounts are subject to specific tax regulations in India. Below is a summary of the tax implications:

Type of Account Taxability TDS (Tax Deducted at Source) Rate Tax Benefits
NRE (Non-Resident External) Account Interest earned is tax-free in India. No TDS. Exempt from tax under Section 10(4)(ii) of the Income Tax Act.
NRO (Non-Resident Ordinary) Account Interest earned is taxable in India. 30% (plus applicable surcharge and cess). No specific tax benefits. NRIs can claim a refund if their total income is below the taxable limit.
FCNR (Foreign Currency Non-Resident) Account Interest earned is tax-free in India. No TDS. Exempt from tax under Section 10(15)(iv)(fa) of the Income Tax Act.

Additional Points

  • NRIs earning interest from NRO accounts may need to file an Income Tax Return (ITR) in India if their income exceeds the taxable limit.
  • NRIs can benefit from Double Taxation Avoidance Agreements (DTAA) between India and their resident country to reduce tax liability.
  • NRIs must provide updated residential status and tax-related documentation to their bank to ensure correct TDS deduction.

Capital-gains-tax-nris-real-e    Differences-nri-resident-tax-    Dtaa-benefits-for-nris    Income-tax-filing-nris    Inheritance-gift-tax-nris    Mutual-funds-tax-nris    Penalties-interest-nris-late-    Rental-income-tax-nris    Repatriation-funds-tax-nris    Residential-status-for-tax   

Topic

  • Home

  • Capital-gains-tax-nris-real-e

  • Differences-nri-resident-tax-

  • Dtaa-benefits-for-nris

  • Income-tax-filing-nris

  • Inheritance-gift-tax-nris

  • Mutual-funds-tax-nris

  • Penalties-interest-nris-late-

  • Rental-income-tax-nris

  • Repatriation-funds-tax-nris

  • Residential-status-for-tax

    Read more