Interest income of non-resident Indians – Tax problems of non-resident Indians repatriated from Kuwait
Following the invasion of Kuwait by Iraq in August 1990, Indian nationals normally resident in Kuwait have been forced to return to India. These non-resident Indians may like to go back once the situation in the gulf region stabilises.
Taking into account the peculiar and difficult circumstances under which non-resident Indians have been compelled to return to India, the Reserve Bank of India have decided to permit them to continue to maintain their NRE/FCNR Accounts in Banks in India and to maintain their foreign currency accounts and assets abroad up to 31st March, 1991. A Press Release dated 15th November, 1990 has been issued in this regard.
2. Under the provisions of sub-clause (ii) of clause (4 ) of section 10 of the Income-tax Act, 1961, income by way of interest on amounts deposited in a Non-Resident External Account in any Bank in India is exempt from income-tax in the case of an individual who is a person resident outside India as defined in clause (q ) of section 2 of the Foreign Exchange Regulation Act, 1973.
3. Taking into account the circumstances under which the NRIs have returned to India and in view of the decision of the Reserve Bank of India to allow them to maintain their NRE/FCNR Accounts up to 31st March, 1991, it is clarified that individuals normally resident in Kuwait and returning to India after 2nd August, 1990 would be eligible for the exemption under section 10 (4)(ii) of the Income-tax Act in respect of such accounts maintained up to 31st March, 1991.
Circular : No. 590, dated 30-1-1991.