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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