TAXATION-NRI

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This discussion clarifies the tax treatment for Non-Resident Indians (NRIs) opting for Section 115I, which allows them to choose regular tax provisions over Chapter XII-A. Specifically, it addresses whether interest income from an NRO bank account, where Tax Deducted at Source (TDS) was applied under Section 195, should be taxed at the flat 20% rate or at normal slab rates as 'Income from Other Sources'. The consensus is that NRO account interest typically falls outside the scope of Chapter XII-A, regardless of the Section 115I election, and should be taxed according to regular income tax slabs.

rmalhotra

rmalhotra (Querist)

24 June 2022 If NRI opts u/s 115I ( Chapter not to apply if assess so choses ) in Chapeter XIIA ( Special Provisions relating to certain income of NRI. and is to file return u/s 139(1) but has got interest income in NRO Bank a/c and is classified u/s 195 of ITax Act FOR TDS , then in such situations will he be still required to be charged tax @20% on interest income OR it can be treated as normal interest income under head ' Income from Other Sources ' ( as he opts section 115I ) and tax be calculated as per normal applicable slab rates.

In such cases where TDS is u/s 195 on interest of NRO a/c but assessee opts normal slab rates u/s 115 I , and file return u/s 139(1), will it be correct as per law

Adv. Ravish Bhatt, ADIT, CIOT

Adv. Ravish Bhatt, ADIT, CIOT (Expert)

26 July 2022 Chapter XII-A contains beneficial provisions for NRI in respect of investment income (derived from foreign exchange asset), LTCG, not filing return in certain cases etc and 115-I says that assessee may choose not to be governed by provisions of said chapter (if he finds calculation under regular provisions more beneficial)

I do not see interest income from NRO account (Indian Currency account) anyway falling within purview of Chapter XII-A, whether one opts for s.115I or otherwise.

Author: Advocate Ravish Bhatt
Gmail: ravishdbhatt@gmail.com
Link to Linkedln Profile: https://bit.ly/3IDGfsU

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rmalhotra

rmalhotra (Querist)

26 July 2022 Thank you sir for your guide and reply please.

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