Special foreign currency account
This query is : Resolved
09 July 2019
Many Banks, as per permissible guidelines offer FCNR accounts along with a forward contract for purchase of maturity amount at a specified [mostly higher rate of exchange against today market rate]. This makes FCNR deposit risk free and with some assured higher return.
Question here is
a) My understanding is such FCNR account get redesignated to RFC account when the NRI becomes resident. Is it correct?
b) Does the benefit derived from FEX forward contract taxable? If so, how is it taxed [rate, term etc, if capital gain]`
Thanks for your support and clarification
Question here is
a) My understanding is such FCNR account get redesignated to RFC account when the NRI becomes resident. Is it correct?
b) Does the benefit derived from FEX forward contract taxable? If so, how is it taxed [rate, term etc, if capital gain]`
Thanks for your support and clarification
09 July 2019
a The returning NRIs and PIOs have the option to transfer the balance held in their NRE or FCNR (B) accounts to an RFC account.
b Taxable.
b Taxable.
09 July 2019
sir,
thanks for the update. I understand my first query is answered and FCNR is converted to RFC.
But, what is the current tax and what component the tax is levied for the Forward Contract. Thanks
thanks for the update. I understand my first query is answered and FCNR is converted to RFC.
But, what is the current tax and what component the tax is levied for the Forward Contract. Thanks
10 July 2019
It will be taxed at applicable slab rates.
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