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Nro interest income expemt or not ?

07 March 2013

I am NRI and living at Dubai. I have NRO account and earned interest income. Tds deducted under sec 195 @ 12.5 % (because of DTAA) agreement on interest income. is interest income should be taxable under income tax act or not ?

Please advice how to not make tax on NRO interest income and reason also ?

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2 Replies

CA Sneha Jalan (CA FINAL) (73 Points)
Replied 07 March 2013

Dear Kapil

If uwould be a ordinary resident then u can claim the TDS deducted under DTAA as per sec. 90...bt since u r a NRI...u r not liable to file the return and ur income vll nt be taxable in INDIA......

THANX & REGARDS,

SNEHA JALAN

CA. CS. Khushboo Dodhia Vora (Practicing Charatered Accountant) (125 Points)
Replied 08 March 2013

Dear Kapil,

You have earned NRO Interest Income and TDS has been deducted @ 12.5%.

Irrespective at what rate the TDS is deducted, your NRO Interest would be finally taxable @ 12.5% (DTAA) or 30.9% (as per Income tax act) whichever is beneficial to you.

If your total income including NRO Interest is less than Rs.200000 for F.Y. 2012-2013, then upto Rs. 200000 there would be no tax for you.

For Eg:

NRO Int = 300000

TDS @ 12.5% =37500

your final Tax liability = (300000-200000)*10.3% = 10300

By filing return of income for that particular year, you may get the refund of (37500-10300) =27200

In case you have any further doubts do write to me

Khushboo

khushboojdodhia @ gmail.com

+91 9920433087

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