Interest on NRE Deposits is taxable for Residents

For an NRI, interest earned on NRE deposits is exempt from tax in India. So long as you continue to be an NRI or a resident but not ordinarily resident – the tax exemption will continue to apply for these deposits held by you.

Given the rules for finding out residential status, an NRI will continue to be resident but not ordinarily resident for 2 years after their return. You can also use our residential status calculator here.

NRE accounts are required to be converted to Resident accounts upon change in your residential status.

When you become a Resident – interest earned on NRE accounts shall be taxable for you. You will also be required to disclose details of all your assets held abroad as well as disclose and pay tax on income you earn abroad. Including interest earned in foreign bank accounts.

Read our very exhaustive guide for NRIs here.

If you are an NRI and have any questions or want to file your Income Tax Return in India, reach out to us and our experts will assist you.

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