Is the interest earned on RFC account liable to tax?
Interest earned on RFC account is not only liable to tax in the hands of the account holder provided he is a Non Resident or Resident but not ordinarily Resident as defined under the Income Tax act. There is an obligation on part of the Bank to deduct tax at source on interest on such deposits. However, an individual account holder can summit the prescribed form for nil/lesser deduction.
Interest earned on RFC account is not liable to tax in the hands of the account holder provided he is a Non Resident, or Resident but not ordinarily Resident, as defined under the Income Tax act. There is an obligation on part of the Bank to deduct tax at source on interest on such deposits. However, an individual account holder can summit the prescribed form for nil/lesser deduction.
