Opened a New NRI account with ICICI Bank - Taxation FAQs
What are the tax implication of your funds lying in NRE & NRO?
There is no tax applicable in India* on funds lying in your NRE and NRO accounts.
Also, no tax is applicable on the interest earned on NRE accounts but interest earned on NRO account is taxable at the rate of 30% plus applicable cess and surcharge. If the interest exceeds Rs. 1 million during the financial year then an additional surcharge of 10% would also be applicable.
*Please check tax regulation in your country of residence
How can you save tax on interest earned in NRO accounts ( Savings account / Fixed Deposit)?
You can save tax on interest earned in NRO accounts by means of DTAA. DTAA stands for Double Taxation Avoidance Agreement.
In case of cross border transactions, the income may be taxed in the home country (basis tax residency) as well as source country (where income is earned) leading to double taxation of the same income. In order to avoid this double taxation of income, the home and the source country mutually enter into tax treaty generally known as DTAA. As per DTAA, generally the income may be taxed at a lower rate or nil rate in the source country. To avail the benefit of DTAA in India, Tax Residency Certificate (TRC) along with Form 10 F and Permanent Account Number (PAN) is to be furnished. Wherever tax is applicable as per the DTAA, if the PAN is not furnished ,benefit of concessional rate as per the DTAA shall not be available. Income tax rates will be as per DTAA agreed between India and various countries.