Income Tax Query

Tax queries 247 views 6 replies

Jagan

IT Developer

11 Points Joined December 2016

Hi, I stayed overseas for few years and returned to india 2 years back. I was doing NRO FDs when I transferred money to india. After returning to India, I didn't convert the NRO accounts to Resident Accounts as I'm not totally familiar with the rules. NRO FDs were getting tax free interest which I didn't put while filing ITR.

Now income tax dept issued a notice about mismatch in tax filing. Could anyone please let me know how do we correct this? Should I show the FD interest income under taxable income and pay tax or are there any other options? Please advise what could be the implications?

Replies (6)

CA. Sourav Sarkar

Chartered Accountant

24588 Points Joined November 2019

Nro FD are not tax free interest and this interest comes under withholding of tax for this reason income Tax department files notice against the interest fd's. You should file such interest as Taxable income and pay tax thereon

sabyasachi mukherjee

Profession Business

28194 Points Joined May 2017

ALL ASSESSE WHO ARE NRO ARE KIABLEVTO PAY ON INCOME ACCRUING OUT OF FD OR MUTAL FUNS/STOCKS INVESTED IN INDIA.
AS A RESULT OF THE FACT TAX IS SUPPOSED TO BE DEDUCTED.

Jagan

IT Developer

11 Points Joined December 2016

Hi, Thanks for the details. Sorry I mentioned then as NRO FDs. In fact, they are NRE FDs. Hence they were tax free.

Now what should I do?

1. Should I show them as taxable income in ITR and pay the tax on these?

(Or)

2. Should I show it as non taxable income in ITR and get an exception?

sabyasachi mukherjee

Profession Business

28194 Points Joined May 2017

Once income accrues in India and the same is credited in a bank account out of any investment option.
It is taxable in India.

Kapadia Pravin

17264 Points Joined December 2018

Since you are resident Indian under IT definition, all types of all source of income is taxable .

File revised return for AY 2020-2021 and include this interest income and pay tax. Also do not forget to claim TDS if any.

for earlier years, pay as per notice.

anil jain

Partner

1072 Points Joined December 2009

Till the time you were non resident, interest on FCNR(b) i.e. (FD bought in foreign currency) will be exempt, thereafter it will be taxable.

Please rectify your ITR under section 154 and pay tax accordingly.

related provisions extracted from google are as below.

Now, again, in case of a returning NRI, up till the date of return – interest income of FCNR(B) account is exempt from Tax. i.e. as a Resident outside India as defined under Foreign Exchange Regulation Act, 1973 such income is exempt uptill the date of return.
However, from the date of return the income from continued FCNR(B) account will be exempt by virtue of Section 10(15)(iv)(fa) of the Income Tax Act, 1961.
Therefore, in the year of return, the income from FCNR(B) account will be divided into two parts. Although, strictly speaking, both will be exempt :
- interest income uptill date of return being exempt under Section 10(4)(ii),and
- interest income from continued FCNR(B) account after the date of return being exempt under Section 10(15)(iv)(fa) of the Income Tax Act, 1961.