Any interest earned on the deposit in an NRE account is exempt from income tax. If you are NRI & permitted to open such account, your interest income is completely tax-free. But when you become a Normal Resident again – then interest earned on NRE accounts shall be taxable in India..
Taxability of Income from NRO Account ?
The interest earned on any type of NRO bank account is taxable
Taxability of Income from FDR Interest
Interest earned on NRE fixed deposit is tax-free in India. However, Interest from FD in NRO account taxable in hands of NRI
Role of Double Taxation Avoidance Agreement(DTAA)
Double Taxation Avoidance Agreement is an agreement entered between two countries which aims to avoid double taxation of the same income in both countries. For claiming the DTAA benefit in India, assessee needs to present Tax Residency Certificate. Tax Residency Certificate can be obtained by the assessee from the government of the country in which he/she resides. By using DTAA, income shall be taxable in the source country only and taxpayer get the benefit from double taxation.
Income tax rate for NRI
Income tax slab rate for NRIs is same as Slab rate for individuals. However, NRIs do not get slab benefit for senior and super senior citizens.