CA Vijay R Singh, FCA
Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Short answerYes. Interest on an NRO (Non-Resident Ordinary) account is fully taxable in India, and the bank deducts TDS at about 30% plus surcharge and cess. This is the opposite of an NRE account, where interest is exempt. A DTAA can reduce the TDS rate if your country has a tax treaty with India.
How NRO interest is taxed
It’s taxed as your income and the bank deducts TDS at source — around 30% plus surcharge and 4% cess for NRIs, which is much higher than the 10% residents face. Confirm the current rate per the Finance Act.
Cut the TDS with a tax treaty
Many of India’s treaties cap interest tax at 10–15%. To get the lower rate, give your bank a Tax Residency Certificate plus Form 10F and your PAN. Without these, the bank applies the full domestic rate.
Getting excess back
If too much was deducted, file an Indian return to claim the refund. And remember the contrast: NRE interest is exempt while you’re a non-resident. Our NRI tax compliance service can handle the filing.