Is NRO account more taxed?

—Name withheld on request

Interest earned on NRO account is subject to tax deduction at source at 30%. However, no TDS is levied on interest from savings account. But please note that both these incomes are fully taxable. Income from NRO account is added to income from other sources in the ITR of the taxpayer. Similarly, interest from savings account is also added to income from other sources in the ITR of a resident taxpayer. The total income of an NRI or resident taxpayer is taxed as per the income tax slab applicable to their total income. A taxpayer is allowed to claim deduction 10,000 from interest income on savings account Interest u/s 80TTA. NRIs are also eligible to claim this deduction. Taxpayers are allowed to claim TDS deduction, which is the tax already paid on earned income against the total tax payable on their total income. If the total tax deducted by the NRI is less than the TDS, then the NRI can claim refund of the additional TDS at the time of filing the tax return.

Another difference between the tax calculation for a resident taxpayer and an NRI is that the minimum exemption limit is fixed at 2.5 lakh for NRI, while resident taxpayers who are above 60 years of age but below 80 can claim exemption 3 lakhs and there is a relaxation limit for those above 80 years of age 5 lakhs.

I am a RoR in India. Will repatriation of money from the sale of a house in UK be taxed in India?

—anish

If a taxpayer is resident and ordinarily resident in India (ROR), his entire global income will be taxable in India. Therefore, profits from the sale of a property located in the UK will be taxable to you in India, whether you decide to repatriate the money or not. You will be allowed to claim benefits available under the Double Taxation Avoidance Agreement between India and the UK. Therefore, if you have paid any taxes in the UK on profit from sales, you may be eligible to claim a credit for such taxes based on the DTAA between the two countries. The computation of capital gains arising from the sale shall be the same as applicable to the property situated in India.

Archit Gupta is the Founder, Chief Executive Officer of Cleartax.