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NRE deposits are tax free

I was working in Malaysia and having my savings in NRE account and FCNR deposits. Now that I have come back to India, I am advised by the manager of the bank that these deposits cannot be treated as exempt NRI deposi

t after 60 days of my permanent arrival in India. The deposits have now been converted into Indian rupees, but for interest paid to me till date of conversion, no tax has been deducted. Am I free from such liability in respect of such interest?

Tax was rightly not deducted. Interest in NRE account, whether held in foreign currency or Indian rupees or whether kept in NRE account or deposits, the income is exempt under Sec. 10(4)(ii) of the Act.

Since the deposits were apparently kept in accordance with Foreign Exchange Regulation Act, 1973, and the regulations of the Reserve Bank of India under the provisions, there is no liability to tax.

S. RAJARATNAM

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