Business   

Interest from NR(E) deposits and RFC accounts continues to be exempt

My son is having a Non-resident External Account NR(E) and Foreign Currency Non-resident Deposits (FCNR), besides Resident Foreign Currency Account (RFC). I am under the impression that interest income from these are exempt, since my son continues to be a non-resident. But I am surprised to find from Business Line dated February 5, (page 13) that such exemption has been discontinued with effect from March 31, 2005. Please confirm whether it is so.

Exemptions for interest for NR(E) and FCNR deposits are available under Sec. 10(4) and Resident Foreign Currency Account under Sec. 10(15)(iv)(fa).

The exemptions were sought to be withdrawn with effect from April 1, 2005 by the Finance (No.2) Act, 2004, but a subsequent amendment by the Finance Act, 2005 has restored the exemption with effect from the same date, that is, April 1, 2005 indefinitely.

The Board in Circular No.3 of 2006, dated February 27, 2006 (2006) 281 ITR (St.) 222 at 227 has also clarified this position of law restoring the exemptions.

The reader is, therefore, right in his inference that the exemption is not lost.

S. RAJARATNAM

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

Economic growth more than just numbers
Mozilla Firefox add-ons revisited
Innovation, quality improvement hallmark of Sharp's plant
Interest from NR(E) deposits and RFC accounts continues to be exempt
TDS in the case of property loss
Share of a member of HUF on partition

Copyright © 2007, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu