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Tax Implications for FCNR Deposits and Residency Status in India
If you have an FCNR deposit and return to India, the interest remains tax-free as long as you are a non-resident or RNOR.
Once you become a resident and ordinarily resident (ROR), the interest becomes taxable.
Upon maturity, you can transfer the proceeds to an RFC account, which is freely repatriable.
For residency status, if your taxable Indian income is below ₹15 lakh and you stay in India for less than 182 days, you may still qualify as a non-resident.
However, if your income exceeds ₹15 lakh and you stay for 120 days or more, you may be considered a resident.
Interest on FCNR deposits is tax-free for non-residents and RNORs under the Income-tax Act, 2025.
Upon becoming a resident and ordinarily resident (ROR), the interest becomes taxable.
Maturity proceeds can be transferred to an RFC account, which is freely repatriable.
Residency status is determined by taxable Indian income and duration of stay in India.
Individuals with taxable income below ₹15 lakh and stay less than 182 days may qualify as non-residents.
- Who
- Individuals with FCNR deposits and those determining their residency status in India
- What
- Tax implications for FCNR deposits and residency status under Indian tax laws
- Where
- India
- When
- Applicable for FY2025-26 and beyond
- Why
- To understand the tax implications of FCNR deposits and residency status in India
Tax Exemption for Non-Residents
Taxation for Residents
Tax Status of FCNR Deposits
Tax Exemption for Non-Residents
Interest earned on FCNR deposits remains tax-free for non-residents and RNORs under the Income-tax Act, 2025.
Taxation for Residents
Once an individual becomes a resident and ordinarily resident (ROR), the interest earned on FCNR deposits becomes taxable.
Residency Status and Tax Implications
Tax Exemption for Non-Residents
Individuals with taxable Indian income below ₹15 lakh and stay in India less than 182 days may qualify as non-residents.
Taxation for Residents
Individuals with taxable Indian income exceeding ₹15 lakh and stay in India for 120 days or more may be considered residents.
Key facts
- FCNR Deposit
- Foreign Currency Non-Resident Deposit
- RNOR
- Resident but Not Ordinarily Resident
- ROR
- Resident and Ordinarily Resident
- FEMA
- Foreign Exchange Management Act
- RFC Account
- Resident Foreign Currency Account
- Income-tax Act, 2025
- Legislation governing tax provisions from April 2026
- Income-tax Act, 1961
- Legislation governing tax provisions for FY2025-26
- PIO
- Person of Indian Origin
Sources
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