What are the taxes on NRE deposit?
SBNRI Team
answered on 24/03/2020
NRE Deposit is tax-free in India as NRE Accounts are meant to maintain the income earned outside India. If you withdraw the funds from your NRE Fixed Deposit Account before 1 year (premature withdrawal) no interest will be paid on the NRE deposit.
The NRE account can be opened for the purpose of maintaining the income earned outside India with tax free interest (upto 7.60%*) on Fixed Deposits. Both the principal amount and interest earned are completely repatriable from India. Although, domestic credits aren’t allowed.
Also Read: Is this the right time to book NRE Deposits in India?
Comparison between NRE Deposit, NRO & FCNR Fixed Deposits:
Factors to consider | Non Resident External (NRE) Account | Non Resident Ordinary (NRO) Account | Foreign Currency Non Resident (FCNR) Account | |
Purpose | For income earned outside India | For income earned from India (pension, rent etc.) | Foreign Currency Investment in India | |
Currency | INR | INR | USD, GBP, EUR, JPY, CAD, AUD, SGD, HKD and CHF | |
Tenure of Deposits | 1 year to 10 years | 7 days to 10 years | 1 year to 5 years | |
Interest | Up to 6.80%* | Up to 7.30%* | Up to 4.05%* | |
Repatriation (transfer of money from Indian bank account to foreign bank account) | Both Principal (money invested initially) and Interest completely repatriable | Up to a maximum of 1 million USD per financial year | Both Principal and Interest completely repatriable | |
Tax Deductions | No tax | Tax on Interest earned (not on principal amount): 30% tax + surcharge + education cess will be deducted at the source of interest earned in India | No tax | |
Related Questions
SBNRI Team
answered on 10/09/2020
No, you won’t get any notice from ITR but you will have to declare this amount under “exempted income” while filing your taxes. To book your NRE FD effortlessly at the comfort of your homes, click on the button below.
SBNRI Team
answered on 23/03/2020
The Minimum tenure of NRO FD is 7 days. The term plan for NRO Fixed Deposits range from a tenure of 7 days to 10 years. The NRO account can be opened for the purpose of maintaining the income earned from India such as income from rent, pension, etc. The repatriation of the money in […]
SBNRI Team
answered on 24/03/2020
Only the interest earned on NRO Deposit is taxable in India: 30% tax + surcharge + education cess* is deducted at the source of interest earned in India. The repatriation of the money in the account can be done up to a maximum of 1 million USD per financial year. *(Cess: A cess is […]
SBNRI Team
answered on 16/11/2020
There are 3 types of NRI FDs you can choose from and 2 of them are not taxable. Non-Resident External (NRE) FD: For income generated outside India, maintained in INR. There is no tax in India on the interest earned. Non-Resident Ordinary (NRO) FD: For income generated in India, maintained in INR. The interest earned […]
