Question ID : 41138

NRI returning India and Interest income from NRE & FCNR

An assesse who is a NRI returned to India during November 2019. His Stay in India during FY 2019-20 is less than 182 days hence qualify as NRI for FY 2019-20. During FY 2020-21 the status of assessee is Resident. He has also satisfied the conditions for RNOR for the previous year 2020-21. (As he was Non Resident for 9 Financial year out of 10 financial year preceding previous year (2020-21). The said assessee has Interest income from NRE and FCNR deposits during FY 2020-21. Kindly guide me with regard to the taxability or exemption available on such interest income earned from NRE and FCNR deposits for FY 2020-21.

Interest from NRE deposit is taxable in the hands of RNOR, as he is no longer a person resident outside India as per FEMA guidelines. He has to re-designate it to resident rupee account. Interest on FCNR deposit is exempt in the hands of NRI and RNOR.