Wondering if NRO account is taxable. Yes, the interest earned on an NRO (Non-Resident Ordinary) account is taxable in India.
Is NRO Account Taxable?
Yes, income tax is levied in India on interest generated on non-resident accounts. The income slab of the individual determines the tax liability. Here's how the taxation generally works:
The interest earned on funds held in an NRO account is subject to income tax in India. The income tax is deducted at source (TDS) by the bank where the NRO account is held. The current TDS rate on NRO account interest is 30% plus applicable surcharge and cess.
Banks are required to deduct TDS on the interest earned on NRO accounts at the time of credit or at the time of payment, whichever is earlier. The deducted TDS is then remitted to the government on behalf of the account holder.
Certain exemptions and deductions may be available under the Income Tax Act, such as under Section 80TTA for interest income up to a certain limit. However, these exemptions may not apply to NRO account interest for non-residents.
Non-resident Indians (NRIs) are required to file an income tax return in India if their taxable income in India exceeds the basic exemption limit.
The interest income from NRO accounts should be declared in the income tax return, and the taxes paid through TDS can be claimed as a credit or refund, depending on the individual's tax situation.
NRIs residing in countries with which India has a Double Taxation Avoidance Agreement (DTAA) may benefit from lower tax rates or exemptions on NRO account interest income as per the provisions of the relevant tax treaty. In such cases, the NRIs need to furnish the Tax Residency Certificate (TRC) and other required documents to avail of the benefits under the DTAA.
This is all about NRO account is taxable.
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2024-04-23T19:53:04+00:00 2024-06-26T16:06:31+00:00Comment
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