Returning nri taxation

Tax queries 192 views 3 replies

Vijay

Professional

8 Points Joined August 2018

NRI returns to India for good in May 2018, closes NRE Accounts say in Aug 2018. In 2019, when he files Income Tax for his India Income for 2018-2019, is he required report and pay Taxes on Interest earned from NRE Acc FD/Savings within this May-Aug 2018 period ? And which IT clause in particular covers this?

Thanks for your help.

Replies (3)

CA Sunil Kumar

Chartered Accountant

4524 Points Joined July 2014

You are considered an Indian resident for a financial year: i. When you are in India for at least 6 months (182 days to be exact) during the financial year. In 2018-19, Your residential status would be indian resident.When you become a Resident – interest earned on NRE accounts shall be taxable for you.
It is taxable under head income from other sources.

Vijay

Professional

8 Points Joined August 2018

Thanks Mr Sunil for your swift reply but bank managers from 3 Banks I met would advise otherwise. They assure that no need to pay Taxes on NRE Accounts interest if it is closed within stipulated time upon return to India. If possible, can I have have the IT clause/Article reg this for record please. Thanks

CA Sunil Kumar

Chartered Accountant

4524 Points Joined July 2014

Income-tax law is clear about the taxability of NRE a/c.Interest on NRE accounts/deposits (re-designated as resident rupee account/deposit) becomes taxable on your return. However If you transfer the balance to RFC account, the interest income will become taxable or exempt as per rules for RFC account.
you should discuss with bank about rule/clause for taxability of NRE a/c issued by RBI.