Module: | NRO Accounts, Tax Rules & Limits
Q9: Priya, an NRI living in Singapore, holds both an NRE Fixed Deposit, and an NRO Fixed Deposit in India. She notices a difference, in the tax treatment of the interest earned. Which of the following statements, accurately reflect the tax rules?
1. Interest earned on her NRO Fixed Deposit, is fully taxable in India.
2. The bank will deduct Tax Deducted at Source (TDS), on the NRO interest earnings.
3. She may avail of a lower tax rate, if a Double Taxation Avoidance Agreement (DTAA) exists, between India and Singapore.
4. Interest earned on her NRE Fixed Deposit is also taxable in India, but at a lower rate.
2. The bank will deduct Tax Deducted at Source (TDS), on the NRO interest earnings.
3. She may avail of a lower tax rate, if a Double Taxation Avoidance Agreement (DTAA) exists, between India and Singapore.
4. Interest earned on her NRE Fixed Deposit is also taxable in India, but at a lower rate.
✅ Correct Answer: B
NRO interest is taxable in India and subject to TDS.
DTAA benefits can reduce the tax rate.
NRE interest is tax-exempt in India.
DTAA benefits can reduce the tax rate.
NRE interest is tax-exempt in India.