NRI in US earns interest income in India on NRO account both SB and FD.
As per Article 11 of DTTA between India and US, “Interest” income from India is taxable in USA.
It is further stated that India may also tax such interest income subject to maximum rate of 15%.
Definition of “Interest” as per DTAA means “income from debt claims of every kind whether or not secured by mortgage”
In the above circumstances, whether the said NRI can avail concessional rate of 15% tax on interest income (NRO account) in India.
Concessional tax treatment for cross border interest income allowed under the India-US tax treaty, reducing Indian source tax on NRO interest. Article 11 of the India-US tax treaty treats interest arising in India as taxable in the United States but allows India to tax that interest subject to a maximum concessional rate; the treaty's definition of interest includes income from debt claims of every kind and therefore covers interest on NRO savings and fixed deposits, permitting the NRI to claim the treaty concession and obtain reduced tax treatment in India on such interest income. (AI Summary)
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