Home » Thought Leadership » Articles

Articles

Archives »
Foreign currency bank deposit interest is tax exempt for NRIs

Author : Raghunath Rao
Dated: Apr 11, 2014

Does a non-resident Indian (NRI) have to pay income tax on interest earned from deposits of foreign earnings while abroad? How do you calculate tax on deposits in India from earnings as an NRI?—Gautam Nambiar

Interest earned on deposits held in foreign currency with a scheduled bank, by a non-resident or by a person who is not ordinarily resident (RNOR) is exempt from income tax according to the provisions of section 10 (15) of the Income-tax Act, 1961 (the Act).

The exemption would be available until you are non-resident or an RNOR under the Act. You will be an RNOR if you are a non-resident in nine out of the 10 previous years or your stay in India in the seven previous years preceding the current year does not exceed 729 days.

Typically, a returning NRI would qualify to be RNOR for two years; consequently, she will be eligible to claim exemption on the interest earned from deposits in foreign currency.

Once you are considered as being ordinarily resident for income tax purposes, your global income becomes taxable in India. Your earnings from deposits in India would be chargeable to tax as per the slab rates applicable to an individual.

Download PDF

I-T return filed after last date needs CBDT approval

Author : Raghunath Rao
Dated: Apr 04, 2014

I have been in China since April 1999. Till that time I was a resident Indian earning in India, but I have been unable to file my Income tax return for the last financial year in India. Being a salaried employee, the tax was deducted at source. Do I need to file returns?—Vinay Agarwal

I understand that you have not been able to file return for income in financial year 1998-1999, i.e. the year ended 31 March 1999. The last date till which you could have filed a belated return for that year was 31 March 2001.

Under the income tax law, any individual having income chargeable to tax is required to file the return of income within the specified due date. Any return filed after the last date allowed under the income tax law will be considered to be invalid unless there is a specific permission from the Central Board of Direct Taxes (CDBT).

As a result, even if you file a return of income now, the same may be considered to be an invalid return.

However, the CBDT is empowered to authorize any income tax authority to admit an application or claim for any exemption, deduction, refund or any other relief even after the expiry of the due dates specified under the Income-tax Act.

In case you have any refund due or a claim to be made for that year, you could approach the CBDT seeking a condonation for the delay in filing the return and request for allowance of the claim or refund.

Download PDF
  Know More

  Subscribe

  Send Online Enquiry

Apple