The imposition of Income Tax on interest accrued or payable on NRI Deposits has been a cause of concern for NRIs. In this connection, we reproduce below an extract from the Times of India on-line dated 7th Dec. 2004 (Tuesday), indicating that imposition of Income Tax has been postponed till April 1, 2006. We expect a Govt. Notification in this regard.
"The Government has withdrawn the income tax proposed on interest accrued or payable on deposits held by NRIs, Minister of State for Finance S.S. Palanimanickam told the Rajya Sabha on Tuesday.
Such accounts include NRI external deposits and foreign currency deposits of NRIs, he said.
Income tax will, however, be payable from April 1, 2006, he said in reply to a question.
Several NRI organizations had raised the issue after the exemption was withdrawn in the budget for fiscal 2004-05 unveiled by Finance Minister P Chidambaram in July.
Minister of State of Overseas Indian Affairs Jagdish Tytler had taken up the issue with the Finance Ministry."