Tax on non resident indians
This query is : Resolved
29 April 2016
What type of bank accounts NRIs can maintain in India. What is the tax implication of interest received by NRIs on such bank accounts. At what rate TDS is deductible on interest received from such accounts
29 April 2016
NRIs can maintain NRO account and NRE account in India. Interest earned on NRE account is exempted. Interest earned on NRO account is taxable and TDS applicable at 30% plus ED cess.
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29 April 2016
Agree Seetharaman Sir, Just want to add :
A Non-Resident External (NRE) account is a bank account that’s opened by depositing foreign currency at the time of opening a bank account. This currency can be tendered in the form of traveler’s checks or notes.
A Non-Resident Ordinary (NRO) account is the normal bank account opened by an Indian going abroad with the intention of becoming an NRI. An NRI can also open this account by sending remittances from his home country or by transferring funds from his other NRO account.
Both NRE and NRO Account can be jointly opened. In case of NRE in name of two or more Non Residence. However in case of NRO it May be held jointly with residents also. Currency in which NRE and NRO account is denominated is Indian Rupees. The Amount Deposited in NRE account is Repatriable were as amount deposited in NRO account has limits and condition for repatriation like up to USD 1 (one) million per financial year (April-March), for any bonafide purpose after giving undertaking along with a certificate from a chartered accountant.
You can chose NRE account in case you want to maintain Rupee Account or you want a joint account with NRI and want rupees to be freely Repatriable. On other hand if you want to maintain Indian earning in India like rent, income from FDs, dividend, etc, or want to open joint account with resident you may open an NRO account.
Taxation of NRI and TDS applicability of NRO / NRE Account
The interest earned on NRO Account as well as the credit balances in account are taxed under the account holder’s tax bracket in India. The Bank will upfront deduct 30% TDS on interest Income which an NRI can file its return and Claim Refund if he is falling within Basic exemption limit. On the other hand, interest earned on the NRE account is totally exempted from income tax and nor TDS is deducted on it, and the credit balances in the account don’t attract any wealth tax.
Abhishek Ranjan Singh
ARS Solutions
www.arssolutions.co.in
+919022838615
Disclaimer - Before making any decisions do consult the experts. We do not take any responsibility for misrepresentation or interpretation of act or rules. Neither we nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on.
A Non-Resident External (NRE) account is a bank account that’s opened by depositing foreign currency at the time of opening a bank account. This currency can be tendered in the form of traveler’s checks or notes.
A Non-Resident Ordinary (NRO) account is the normal bank account opened by an Indian going abroad with the intention of becoming an NRI. An NRI can also open this account by sending remittances from his home country or by transferring funds from his other NRO account.
Both NRE and NRO Account can be jointly opened. In case of NRE in name of two or more Non Residence. However in case of NRO it May be held jointly with residents also. Currency in which NRE and NRO account is denominated is Indian Rupees. The Amount Deposited in NRE account is Repatriable were as amount deposited in NRO account has limits and condition for repatriation like up to USD 1 (one) million per financial year (April-March), for any bonafide purpose after giving undertaking along with a certificate from a chartered accountant.
You can chose NRE account in case you want to maintain Rupee Account or you want a joint account with NRI and want rupees to be freely Repatriable. On other hand if you want to maintain Indian earning in India like rent, income from FDs, dividend, etc, or want to open joint account with resident you may open an NRO account.
Taxation of NRI and TDS applicability of NRO / NRE Account
The interest earned on NRO Account as well as the credit balances in account are taxed under the account holder’s tax bracket in India. The Bank will upfront deduct 30% TDS on interest Income which an NRI can file its return and Claim Refund if he is falling within Basic exemption limit. On the other hand, interest earned on the NRE account is totally exempted from income tax and nor TDS is deducted on it, and the credit balances in the account don’t attract any wealth tax.
Abhishek Ranjan Singh
ARS Solutions
www.arssolutions.co.in
+919022838615
Disclaimer - Before making any decisions do consult the experts. We do not take any responsibility for misrepresentation or interpretation of act or rules. Neither we nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on.
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