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Income tax on interest earned on nre account if its is repatriated to australia

Tax queries 420 views 1 replies

I am NRI living in Australia. I have an NRE account in India. I know that the interest earned on NRE account is tax free. Also, I know that NRE account is fully repartiable.

Lets say I deposit $10,000 to my NRE account (which will be converted to INR) and over a period of time I earn $2000 (equivalent in INR) in interests.

My questions:

1. If I bring all the money (principle+interest) to Australia, do I need to pay tax on $2000 that I earned as interest in India? My guess is, it will be treated as my income and will be taxed accordingly.

2. What if I just bring my principle amount back. My understanding is, this should not be taxed as I already paid tax on this when I earned this in Australia.

Need comments on Tax Gurus here :) 

Happy to clarify anything if I have not made myself clear here.

Cheers!

Replies (1)

For an NRI, interest earned on NRE deposits is exempt from tax in India. So long as you continue to be an NRI or a resident but not ordinarily resident – the tax exemption will continue to apply for these deposits held by you.


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