INCOME RECEIVED IN NRE ACCOUNT

[manoj gupta]

An Indian Citizen works in Nigeria. During the fin. year 2010-11 he stayed in Nigeria upto 31.08.2010. During this period he received his salary from Nigerial company in his NRE account opened in an Indian branch of HSBC bank. After that he came to India. The company continued to pay salary in his NRE account till 30.11.2010. Now, he is ordinary resident in India in 2010-11 as he satisfies the relevant conditions.

-Is his salary received in NRE account is treated as received in India and is it taxable in India.

- What is the position if Nigerian company has already deducted/paid tax on this salary in Nigeria.

- Is interest received in NRE account taxable in India.

Pls. clarify.

[Anuj Gupta]

- Yes the salary received in India can be taxable on the receipt basis.

- Credit of TDS deducted in Nigeria shall be available.

- No the same is taxfree.

 

Also kindly check as the ransfer of salary in NRE acount is not permitted. NRO account is used for the same purpose.

 

Anuj

AI Summary

Taxability of salary received in India: salary credited to Indian account may be taxable and foreign tax credit may apply. Salary paid by a foreign employer into the taxpayer's Indian NRE account was treated as received in India and therefore taxable on a receipt basis when the taxpayer was an Indian resident; foreign tax deducted may be credited against Indian tax. Interest on the NRE account is tax-exempt. A practical banking note states salary should typically be received in an NRO account as transfers to NRE accounts are not permitted.