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!
CAclubindia
