• Income tax on NRE account

I worked in Qatar from Jan 2012 to 1 sept 2020. I have an NRE account which is still active. How long can I retain this account as NRE as some of my fixed deposits are still to mature. Will the interest earned will be taxable for this financial year?
Asked 16 days ago in Income Tax

Interest earned on NRE account is exempt. As long as you are having NRE status you can keep the accounts. After that it is advisable to change the status. 

Vidya Jain
CA, Kolkata
968 Answers
49 Consultations

4.8 on 5.0

You should get the account converted to resident account. The interest earned on it will be taxable now. You can take 10K exemption under 80TTA.

Ruchi Goel Anchal
CA, Gurgaon
481 Answers
5 Consultations

5.0 on 5.0

Once your residential status is changed to RNOR you cannot manitain NRE account. Interest received on NRE account would be taxable. You can hold the FD NRE account till maturity but interest income would be taxable in your hands. You can open RFC account and transfer proceeds of NRE account to RFC account.

Vivek Kumar Arora
CA, Delhi
4337 Answers
461 Consultations

5.0 on 5.0

You should inform the bank. As I understand the FD will continue till maturity.

Ruchi Goel Anchal
CA, Gurgaon
481 Answers
5 Consultations

5.0 on 5.0

You can hold NRE account upto maximum 6 months after you permanently return to India as per FEMA law and after you become ordinary resident your entire interest shall be taxable in India.

 

Hope you find the information helpful, if yes do rate if 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
3949 Answers
58 Consultations

5.0 on 5.0

Hi

 

Upon your return to India permanently, you will have to convert your existing NRO / NRE savings account and deposits into resident savings account and deposits. You may also convert your funds in NRE account /deposits into resident foreign currency (RFC) account /deposits.

Interest from NRE account is tax-free only for non-residents. As soon as you return to India, any interest earned on NRE account will be taxable.

You cannot maintain your NRE account and NRE FDs when you are an RNOR. You need to convert your NRE account to resident account immediately upon returning to India. You need to convert these accounts to resident accounts within a reasonable period of time. The reasonable period can be assumed as 3 months.

 

Karishma Chhajer
CA, Jodhpur
2444 Answers
27 Consultations

5.0 on 5.0

NRE Deposits can be held till maturity. You can then convert it to resident account. The amount from the NRE fixed deposits on becoming resident will be taxable. 

Prerna Peshori
CA, Pune
19 Answers

5.0 on 5.0

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