I am an NRI since April 2014 as per income tax rules, as I stay in India for less than 182 days during each financial year. I plan to invest a large sum of money in the NRE fixed deposit with Indian bank here for 5 years. I will be permanently shifting to India by 31 March 2020, after which I will be a resident Indian as per income tax rules. What would the tax treatment on interest incomes be like after this?
— Name withheld on request
Under the India income tax law, interest income from NRE accounts (savings and fixed deposits) earned by an individual is exempt from tax in India provided the individual qualifies as a “person resident outside India” under the exchange control law. The rules for determination of residential status under the exchange control law are different from those under the income tax law.
