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Anand   28 April 2016

Nre deposits taxes

I have been getting conflicting views on how NRE fixed deposits are taxed after an NRI returns to India permanently. I have talked to the bank and one bank has said that the fixed deposit needs to be closed immediately on return and another bank says that they can run till maturity. I had spoken to two CA's and they both also gave conflicting views, one saying that the NRE fixed deposit was tax exempt until maturity even after I returned to India and that if I didn’t break the deposit I would not have to file IT returns for the interest income on them. And another said that the interest income is taxable immediately on my return, and I would have to file IT returns accordingly. I am now very confused If anyone could help with the following questions. 1 Do I have to break the NRE fixed deposit on returning back to India permanently or can it continue till maturity? 2. Do I have to pay taxes on the interest income or does that also remain tax free until maturity.



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 2 Replies

siddhartha sinha   28 April 2016

Everything depends on whether you are NRI or RNOR for the particular year. In both cases you will not pay any tax. If you are resident for that year alone then you will be taxed for foreign income i.e. interest here. Secondly, in such cases of doubt the practical way is to assume you are taxable and pay an amoint lesser than you are required to pay according to you. You will either get a notice for dues or refund.

siddhartha sinha   28 April 2016

As regards closing of any account its not required to be closed at all. It simply gets re-designated as resident account.

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