So you are an NRI and similar to many NRIs you are also having NRE/NRO account,
In this article we will discuss about taxability of Interest earned on money kept in such accounts and basic difference between NRE/NRO Account.
On first note let’s discuss about basic meaning of accounts:
Similar to NRE account this account can also be opened and operated by NRIs, only difference is that this account is held to maintain the income earned by NRIs in India… i.e. NRI can deposit money earned in India in Rupee denominated currency.
Any interest earned in this account will be governed by Indian Income Tax act and shall be subject to Tax Deduction at Source (TDS).
An NRE account is tax-free (no income tax, wealth tax or gift tax) in India. On the other hand, the interest earned in NRO account and credit balances are subject to respective income tax bracket. They are also subject to applicable wealth and gift tax.
Less than or equal to 50 lakhs
31.2% (tax rate @ 30%+surcharge 0% + cess 4%)
Greater than 50 lakhs but less than 1 crore
34.32% (tax rate @ 30%+surcharge 10% + cess 4%)
Greater than or equal to 1 crore
35.88% (tax rate @ 30%+surcharge 15% + cess 4%)
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