As we know, section 10 of the Income Tax Act covers a list of income which do not form part of the total income. The present article highlights the following sections exempting interest to non-resident –
1. Section 10(4)(i) – Interest from notified bonds or securities;
2. Section 10(4)(ii) – Interest from the amount standing credit in Non-Resident (External Account); and
3. Section 10(4B) – Interest on savings certificate issued before 1st June 2002.
Page Contents
- Exemption available under section 10(4)(i) of the Income Tax Act
- Exemption available under section 10(4)(ii) of the Income Tax Act
- Type of exemption available under section 10(4)(ii)-
- Understanding exemption available under section 10(4B) of the Income Tax Act
- Type of exemption available under section 10(4B)-
Exemption available under section 10(4)(i) of the Income Tax Act
Category of the person eligible for exemption under section 10(4)(i) – Non-resident
Type of exemption available under section 10(4)(i)
1. Any income by way of interest received from certain notified bonds or securities; and
2. Any income by way of the premium received on the redemption of such notified bonds.
Exemption available under section 10(4)(ii) of the Income Tax Act
Category of the person eligible for exemption under section 10(4)(ii)-
1. Any individual being a person resident outside India [as defined under section 2(w) of the Foreign Exchange Management Act, 1999].
2. Any individual who is permitted by the Reserve Bank of India to maintain the Non-Resident (External Account).
Type of exemption available under section 10(4)(ii)-
Any income by way of interest received from the money standing credit in a Non-Resident (External Account).
The said Non-Resident (External Account) should be in any bank in India, and it should be in accordance with the Foreign Exchange Management Act, 1999 and the rules made thereunder.
Understanding exemption available under section 10(4B) of the Income Tax Act
Category of the person eligible for exemption under section 10(4B)-
Any individual, being a person of Indian origin or a citizen of India, who is a Non-Resident.
It should be noted here that the Explanation (a) to section 10(4B) states that the person shall be deemed to be of the Indian origin if either he or any of his parents or any of his grandparents were born in undivided India.
Type of exemption available under section 10(4B)-
Any income by way of interest received from interest on savings certificate issued before 1st June 2002.
Further, it is mandatory that in order to claim the exemption, the individual should have subscribed to such savings certificate in convertible foreign exchange remitted from the country outside India. Such remittance should be in accordance with the provisions of the Foreign Exchange Management Act, 1999 and the rules made thereunder.
Table – Articles on Section 10 Exemptions
Author Bio
I am NRI. I received dividends
of 22 lakhs for the financial year ending in March 31, 2020.
Please advise what is my tax obligation as NRI
THANKS