Foreign exchange asset: NRO deposits funded by convertible foreign exchange treated as such; interest taxable as investment income.

An NRO deposit made with convertible foreign exchange in a banking company (not a private company) qualifies as a foreign exchange asset; interest from that deposit is investment income under the chapter XII-A regime and is taxable at the prescribed rate for investment income, and banks paying such interest must deduct tax at source at that prescribed rate.

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