Tax on nri a/c

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 August 2012 An NRI (now resident of UAE) is having interest income on deposits in his NRO A/c in the Indian bank. Bank has deducted TDS @ 15% on the interest amount. My query is that the slab rates are applicable to such NRI or not which are applicable to a resident are applicable to a NRI also?

U S Sharma

U S Sharma (Expert)
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29 August 2012 As per section 206AA introduced by Finance (No. 2) Act, 2009 w.e.f 01.04.2010, every person who receives income on which TDS is deductible shall furnish his PAN Number to the deductor, failing which TDS shall be deducted at the maximum marginal rate or 30% (plus 3% edu cess) whichever is higher.

The interest on NRO Accounts / Deposits and PIS transactions would be covered by the said rule

* TDS, when due and applicable will be deducted in accordance with the provisions of the Income Tax Act, 1961 and the Rules thereunder as in force. Such TDS shall be recovered from saving/current/demand deposit a/c(s).

Querist : Anonymous

Querist : Anonymous (Querist)

30 August 2012 Mr. Sharma, got your view & thanks for the same. But my question is that the slab rates applicable to a resident , i.e. Upto Rs 2 Lacs - Nil; Rs 2 Lacs - Rs 5 Lacs - 10% ..... and so on, are applicable for an NRI alsofor determining his tax liability?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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26 July 2025 Great question! Here's the key point about **tax slabs for NRIs on interest income** from NRO accounts:

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### Are slab rates applicable to NRIs like residents?

**No**, NRIs are **not eligible for the same slab rates** and exemptions that residents enjoy for income like interest on NRO accounts.

* Interest income earned by NRIs on NRO accounts is **taxable at a flat rate of 30% plus applicable surcharge and cess**.
* The bank deducts **TDS @ 30% (plus cess and surcharge)** on such interest income.
* The basic exemption limit and slab rates that apply to residents **do not apply to NRIs** for this income.

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### Additional details:

* NRIs have to file an Income Tax Return in India if they want to claim refunds or show other incomes.
* If an NRI has other sources of income or claims deductions, filing a return might be beneficial.
* NRIs can reduce TDS if their tax liability is lower than 30% by submitting appropriate forms or certificates from the Income Tax Department.

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### Summary:

| Resident Indians | NRIs |
| ---------------------------------------------------------------- | ---------------------------------------- |
| Slab rates apply with exemption limits (e.g., ₹2.5 lakhs exempt) | Flat 30% tax rate on NRO interest income |
| Interest income taxed as per slabs | No slab exemption on NRO interest |

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If you want, I can help you understand how an NRI can plan tax on their Indian income or file returns. Want me to?

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