ITR
NRE interest exempt and NRO interest taxable
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Facts
Interest on NRE accounts is exempt for non-residents. Interest on NRO accounts is taxable in India and has TDS.
Provisions and law
- Sec 10(4)(ii), Income-tax Act 1961Interest on NRE account of a non-resident is exempt.
- Sec 195, Income-tax Act 1961 (now Sec 393, Income-tax Act 2025)Tax is deducted on payments to non-residents at the rates in force.
Analysis
Show NRO interest under other sources and claim the TDS. You may show NRE interest as exempt income in the exempt income schedule. If you became resident during the year, NRE interest may become taxable, so check status. Banks may also ask you to update status.
Conclusion
- Get interest certificates for NRE and NRO accounts.
- Show NRO interest as taxable income.
- Show NRE interest as exempt if non-resident.
- Claim TDS on NRO interest.
A Savvy can do this for you
NRI income tax return, ITR-2 or ITR-3
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