NRO deposits Income (Interest) is taxable in the hands of Non-Residents Indian

Non-resident Indians can remit or transfer up to $1 million from an NRO (Non-Resident Ordinary ) to NRE (Non-Residential External) account by producing necessary documents. Remittance or transfer beyond $1 million can possible with prior special permission from RBI.

Under the Indian income tax law, any sum exceeding 50,000 received without consideration from any person is taxable in the hands of the recipient subject to specified exceptions. However, gifts from specified relatives are not chargeable to Income tax. So there will no  Income tax implications in India on the transfer of funds from father’s account to Son’s NRO account and then to Son’s NRE account.

However, Interest income earned from  NRO account will be taxable. Deduction under Section 80TTA of Income Tax act 1961 is available on interest income up to 10,000 earned on savings account by an individual who is not a senior citizen.

Interest income from NRE accounts is exempt from tax in India if person qualify as a “person resident outside India” under the exchange control law or if Person are permitted by the Reserve Bank of India (RBI) to maintain such an account.


 
 

Leave a Comment