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Q.

Is NRO Account Taxable?

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0 2024-07-17T11:47:58+00:00

Wondering if NRO account is taxable or not? Yes, an NRO (Non-Resident Ordinary) account in India is taxable under certain circumstances. Here’s an explanation of the tax implications associated with an NRO account:

Interest Income:

  • Interest earned on the funds deposited in an NRO account is taxable in India. This income is subject to income tax as per the slab rates applicable to the account holder.

  • Banks deduct TDS (Tax Deducted at Source) at the rate of 30% (plus applicable surcharge and cess) on the interest income earned in an NRO account.

Other Incomes:

  • Income from other sources, such as rent received from properties in India, dividends, or any other income earned in India, credited to the NRO account is also taxable.

  • TDS may be applicable on such incomes as per the prevailing tax laws.

Tax Exemptions: Certain exemptions and deductions available to residents under the Income Tax Act may not apply to NRIs holding NRO accounts. For example, exemptions under sections like 80C (for investments), 80D (for health insurance premiums), etc., are generally not available for NRO account holders.

Tax Compliance:

  • NRIs file Income Tax Returns (ITR) in India is required if their total income, including income from an NRO account, exceeds the basic exemption limit.

  • They need to disclose all income sources, including interest earned on NRO deposits, and pay taxes accordingly.

This answers your query is the interest earned on NRO account taxable.

NRIs holding NRO accounts need to report the interest income and other taxable income from India while filing their ITR. Form 26AS, available online, provides details of TDS deducted on interest income and helps in reconciling tax liabilities.

An NRO account serves as a convenient way for NRIs to manage their income and transactions in India. However, it’s important to be aware of the tax implications and comply with Indian tax laws regarding income earned from the NRO account.

Seeking guidance from a tax advisor or financial consultant can help NRIs navigate through tax obligations, optimize tax efficiency, and ensure compliance with the Income Tax Act. This is all about NRO account is taxable.

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How To Avoid TDS On NRO Account?

 
26 2023-04-21T11:34:48+00:00

Setting up a bank account in India is not hampered in any way by your status as an NRI. You still have the legal right to manage your finances and earn money in India, even if you live in another country. But my cousin is an NRO and he wanted to know is NRO account taxable or not. So, I went to his bank to enquire about it and this is what I got to know.

Let experts from NoBroker assist you in understanding property rights and regulations in India.

NRO account tax in India

It is possible to open a Savings, Current, or Fixed Deposit in an NRO (Non-Resident Ordinary) account. Indian rupees are used to hold the money in an NRO Account.

Is there any tax on NRO account?

NRIs are responsible for paying charges on pay acquired in India, accumulation of funds through investments like dividends or interest, and receipts for consulting fees or property rent. They are obligated to pay taxes on those particular sums. Examples of NRO account tax implications are:

  • Capital gains from investments made in India; 

  • Salary or consulting fees earned in India; 

  • Rent from a property owned in India; 

  • Interest income from your NRO account or deposits.

Do remember that all the profit got in your record regardless of whether you work in India or abroad, your NRO Record charge suggestion will come set up.

Your NRO account earnings are subject to taxation at a rate of 30%, plus any applicable surcharge and cess.

You can gain from the DTAA Agreement, despite the NRO tax implications. India has signed a Double Taxation Avoidance Agreement (DTAA) with 90 countries that allows you to claim tax credits while filing taxes in your home country by following a few easy steps. As an NRI you have the potential to acquire tax reductions for charges paid in India which is against your duty obligation in the country you live in.

I hope this explains to you is NRO account taxable or not.

Read More: Difference between NRE and NRO account? Can NRI Buy Property in India without Aadhar Card?
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