Interest on nre accounts for resident

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 September 2014 A NRI came to India in 2009 and since then staying in india.

he has NRE account with bank, whether the Interest earned is tax free and if yes under which section

as my calculation, the person is now a ordinary resident of India. AM i Correct in this or not

Pls. reply ASAP

also tell me whether the Interest is taxable under income from other sources exemption of Rs. 10000/- on saving bank interest is available or not.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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30 September 2014 Once an NRI becomes a resident Indian, the status of NRE account is also changed to resident account. Upon return to India, the contracted interest rates for NRE fixed deposits opened before return to India will continue till maturity. The accounts are then re-designated as resident and hence IT rules and guidelines are applicable to them.

Querist : Anonymous

Querist : Anonymous (Querist)

30 September 2014 Dear Seetharaman,

Thanks for reply but my question is partially answered, pls. tell whether the person is resident or Not Ordinary Resident for F.Y. 13-14. based on that we can know about taxability of interest

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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30 September 2014 Now depending on the date of return, a person can take the benefit of the RNOR status for up to 3 tax years in India. (Note than a tax year in India is a fiscal year, that is, from April to March)
your calculation is correct now the person is ordinary resident.

Querist : Anonymous

Querist : Anonymous (Querist)

30 September 2014 Dear Sir,
Since the nature of NRE Account is not changed till 31 march, so whether the same shall be treated as normal saving bank Account for taxability