Does an NRO account attract more tax?
Interest earned on NRO account is subject to tax deduction at source at 30%
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I’m a UAE resident. I got to know that the tax on an amount in NRO account is much more than in a savings account. Is this true?
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—Name withheld on request
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Interest earned on NRO account is subject to tax deduction at source at 30%. However, there is no TDS on interest from a savings account. But please note that both these incomes are fully taxable. Income from NRO account is added to income from other sources in the ITR of the taxpayer. Similarly, interest from a savings account is also added to income from other sources in the ITR of a resident taxpayer. The total income of an NRI or of a resident taxpayer is taxed according to the income tax slabs as applicable on their total income. A taxpayer is allowed to claim a deduction of ₹10,000 from interest income on saving account interest under Section 80TTA. NRIs are also eligible to claim this deduction. Taxpayers are allowed to claim TDS deducted, which is tax already paid on income earned, against the total tax payable on their aggregate income. In case the total tax payable by the NRI is less than the TDS deducted, the NRI can claim a refund of the excess TDS at the time of filing the tax return.
Another difference between tax calculation for a resident taxpayer and an NRI is that the minimum exemption limit is fixed at ₹2.5 lakh for NRIs, whereas resident taxpayers who are more than 60 years of age but less than 80 can claim an exemption of ₹3 lakh and exemption limit for those who are more than 80 years of age is ₹5 lakh.
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I am an ROR in India. Will repatriating funds from the sale of a house in the UK attract taxes in India?
—Anish
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In case a taxpayer is resident and ordinarily resident (ROR) in India, his/her entire global income shall be taxable in India. Therefore, gains from the sale of a property situated in the UK shall be taxable for you in India, whether or not you decide to repatriate the funds. You will be allowed to claim benefits available under the double taxation avoidance agreement between India and the UK. So, if you have paid any taxes in the UK on the gains arising from the sale, you may be eligible to claim credit for such taxes based on the DTAA between the two countries. The calculation of capital gain arising from the sale shall be the same as applicable to a property situated in India.
Archit Gupta is founder, chief executive officer, ClearTax.
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