What is the tax on NRO deposit?
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 a tax on tax that you pay to the government for purposes set by the government. The cess is charged till the objective set by the government is fulfilled. Eg: Krishi Kalyan Cess, Swachh Bharat Cess etc.)
Comparison between NRO Deposit, NRE & FCNR Fixed Deposits:
Factors to consider | Non Resident Ordinary (NRO) 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 | |
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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 […]
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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 […]
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There is no tax on FCNR Deposit in India. What is an FCNR Deposit? A Foreign Currency (Non-Resident) Account which is a term deposit account in USD, GBP, EUR, JPY, AUD, CAD, SGD, HKD, and others. The ‘term’ in a term deposit account is a fixed tenure of up to 12 months, 24 months, […]
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The Minimum tenure of an FCNR Deposit is 1 year. What is an FCNR Deposit? A Foreign Currency (Non-Resident) Account which is a term deposit account in USD, GBP, EUR, JPY, AUD, CAD, SGD, HKD, and others. The ‘term’ in a term deposit account is a fixed tenure of up to 12 months, 24 months, […]
