Finance, Forex and Investments

NRO Account question and tax(Australia to India)?

Hi, I am Permanent Resident of Australia as visa status and citizen of India. And full-year tax purpose resident to ATO Australia. I am planning on opening a NRO account and had a few questions related to it. 1)How to open NRO account from Australia i.e. say how to open new account in “Bank of India”? 2)What will be my source currency to NRO account (i.e. must be Australian dollar or INR) AND What will be my designated (future) currency out from NRO account (i.e. INR or AUD)? 3) Is there a limit on the dollar amount I can transfer from the Australia (AUD) to a NRO account? 4)The source money in Australia comes after tax deduction. So do I have to pay tax in India on interest I earn? If yes than what tax rate in India? (Like for male, I think up to Rs 1 lakh is tax free rate zone in India?) Do I still need to declare this interest earned as income on my Australia tax return. If yes, will I have to pay taxes in both countries? 5) How does the rate of taxation work? If I deposit $1000 in a NRO account for one year, earn $100 (Rs 3800) in interest and pay taxes in India. When I file my return here, do I have to add the $100 as my income and then claim deduction for the tax I have paid in India. Will I be able to deduct all the tax that I have paid in India? Pls reply asap. Thanks.

Public Comments

1. About Account and other details- RBI Web site: http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=3632&Mode=0#2 As far as I know, I will try to answer to your question. For easy and to free from tax problems, send the money to your father/mother/brother/sister as gift. Gift to close blood relatives are free from gift tax. They can open a FD with that money and pay taxes if any on that FD interest. It is easy way. How to open NRO A/c can be found in the web sites of their banks. You can google it and can find it. You can deposit in $ or in Indian rupees. The account will be in the form of indian rupees. Please note that the funds in NRO account cannot be converted into other than Indian rupees. If you deposit in NRO FD, then there will be a TDS (tax deduction) on it which you have to claim again after filing tax returns. It is actually a difficult process. I do not think that you have to pay any taxes on Indian Income in Australia. Sorry for I could not answer you properly.
2. Hi Dear NRO A/c is not for NRI. You can open a NRE A/c which is not taxable. account will be in Rupees and has to be remitted in foreign currency. If you want to maintain in foreign currency you can deposit in FCNR A/c. NRO A/c Tax is deducted @ 30% of the income earned
3. 1, You can send the first remittance in the form of a Demand Draft drawn on a Bank which has offices both in India and Australia. For example, you may try Standard Chartered or Citibank. If SBI has an office there nearby, or ICICI Bank (or any Indian Bank for that matter), that would be ideal. You fill inthe form (downloadable from the Internet), enclose your Photo ID, Copy of PAN card (Indian) attested by the local Bank and forward these documents to the desired Branch of the Indian Bank through your Bank. 2. Source will always be Australian currency. You may also buy Indian Rupees and send them. 3. Sky is the limit for transferring funds from Australia to India. 4. If you earn interest on the Bank deposits in India, it becomes taxable. A basic exemption limit of (presently) Rs. 1,50,000 will be available to you. 5. You do not have to pay tax in both countries. If India and Australia have a Double Taxation Avoidance Treaty in place, only one of the countries will tax them. Alternatively, you can get the credit for Indian taxes paid from Australian Internal Revenue authorities. 6. After the initial exemption limit of Rs. 1,50,000, you have to pay Indian Income Tax which will be 10% for the next Rs. 1,50,000 and 20% for the subsequent Rs. 2,00,000 and 30% for the excess above Rs. 5,00,000. This should satisfy your question thirst.
4. On the interest income in the NRO account, the bank will deduct TDS at 30%. Then you must file your tax return, if you have a refund. Or if you expect the bank interest to be less than the exemption amount Rs. 1,50,000 for FY 2008-09 (for FY 2009-10, wait for budget), then you should submit Form 15H to bank so that they do not hold TDS. Read http://mytaxes.in/index.php?topic=39.0 If Australia wants residents to declare worldwide income, then you must report India bank interest on the Australia tax return. You may consider NRE account instead of NRO account. For NRI accounts NRO, NRE and FCNR, read http://mytaxes.in/index.php?topic=150.0