DTAA - Double Taxation Avoidance Agreement: Definition, Types, and Benefits
NRO vs. NRE Accounts: NRO accounts hold Indian earnings, while NRE accounts hold remitted foreign earnings.
Purpose: NRO allows managing Indian earnings, while NRE facilitates repatriation of foreign earnings.
Regulatory Compliance: FEMA mandates NRIs to convert savings into NRO or NRE accounts to avoid penalties.
Account Distinctions:
NRO: Taxable interest, joint holder can be NRI or resident, limited remittance.
NRE: Tax-exempt interest, joint holder must be NRI, unlimited remittance.
Taxation:NRO: Interest taxed at 30.9% with TDS; refundable if total income below threshold.NRE: Interest tax-exempt; becomes taxable if NRI becomes resident.Repatriation:NRO: Restricted; requires approval for repatriation.NRE: Fully repatriable; both principal and interest.
Tax Filing: NRIs must file returns if income exceeds Rs. 2,50,000 or to claim TDS refund.
Scenario: Vishwa's NRO interest of Rs. 1,00,000 was subject to 30.9% TDS, refundable as her total income isn't taxable.