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 |
|
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. Share via:
SBNRI Team
answered on 23/03/2020
There are multiple factors to consider while drawing out a comparison between NRE/NRO/FCNR Fixed Deposits. Here is an overview of the accounts for you to choose the best Fixed Deposit as per your needs. Comparison between NRE/NRO/FCNR Fixed Deposits: Factors to consider Non Resident External (NRE) Account Non Resident Ordinary (NRO) Account Foreign […]
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
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, […]