Tax on NRE deposit interest earned, when in India

Hi all,

I am a foreign passport and India OCI card holder. I have deposits in my NRE account, the interest earned on which is tax free in India.

My question is: If I move to India for 2-3 years for employment, what would be the treatment of interest earned on NRE deposits in India? Would I be paying tax only on my salary income or everything, including NRE deposits income? 

Thanks for your valuable answer,

Asked 2 years ago in Income Tax from Haryana, Haryana
The interest on NRE deposits will be exempt but can you continue to hold NRE deposits, if you are no longer a NRI?
B Vijaya Kumar
CA, Hyderabad
833 Answers
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If you are moving to India for certain number of days that is for specific purpose then you continue to be a non-resident under FEMA and hence interest on NRE deposit continue to be exempt under Income Tax Act.
Vijay N. Kale
CA, Hyderabad
248 Answers
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If you move to India for taking up an employment , you may loose your non resident status  depending upon your stay in India .  Thus you may become a resident in India .
In this case , the NRE account can be converted into a RFC account . During the period , when you are the resident , your global income is taxable in India .
Interest on the NRE account will not taxable in India as long as you are Non resident . Once you become resident , the interest of that particular year will be taxable in India .
Prakash Sinha
CA, Delhi
112 Answers
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