You can transfer funds from one NRO a/c to another
My parents, who are no more, were NRIS and had a joint non resident (ordinary) or NRO account in India. I was the nominee in the account. I too am a resident of New Zealand. Can I transfer the amount from their account to my NRO account, without any tax on it? If I close their account and withdraw all the money, will there be any TDS?
—Surubhi Das Under the income tax law, tax is payable on any sum of money, specified movable property (like shares, jewellery etc.) or immovable property received by an individual without consideration, except if the same is received, inter alia, under a Will or by way of inheritance or from a specified relative. Further, under the exchange control law, it is permissible to transfer funds from one NRO account to another NRO account in India.
Accordingly, you may transfer funds from your parents’ NRO account (as nominee) to your NRO account in India. As the transfer would be by way of inheritance, there will not be any tax implications in India. Funds from NRO account up to $1 million per financial year are permitted to be remitted out- side India.
Interest income from your parents’ NRO account or your NRO account is taxable in India at the applicable slab rate. However, interest income from NRO savings bank account is eligible for deduction from total income up to ` 10,000 (effective financial year 2018-19, it is ` 50,000 for senior citizens aged 60 years or more for both, interest income on savings account and fixed deposits).
However, withholding tax provisions are applicable in case of NRO bank account. Income tax would be deducted by the bank as TDS on interest income from NRO accounts at 30% (plus applicable surcharge and education cess) if the individual qualifies as a non-resident in India. While TDS will be at 30% (plus applicable surcharge and cess), the interest income will be taxable at slab rates (plus applicable surcharge and cess).
However, an individual qualifying as a non-resident may avail relief under India’s Double Tax Avoidance Agreement with the country of which such individual is a tax resident by furnishing a tax residency certificate and other specified particulars. In such a case, TDS and final tax rate may be lower than 30% (plus applicable surcharge and cess).
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