ICICI Bank to offer tax sops on NRO deposits

Mumbai: Non-resident Indians and Persons of Indian Origin have the option to claim tax concession on their Non-Resident Ordinary (NRO) deposits under the Double Taxation Avoidance Agreement (DTAA).

Hitherto, banks were offering the concession only to NRIs who were aware of the facility. ICICI Bank has now made the lower rate of tax a standard product feature to its NRI customers. The bank on Dec 10 rolled out NRO FD Plus, which offers an interest rate of 8.5 per cent per annum for a 390-day deposit.If the DTAA benefit is not allowed, interest on the NRO deposit is subject to a tax of 30.9-33.9 per cent. However, if customers give declaration and proof that they are from a region that has a DTAA with India, ICICI Bank will offer a lower tax rate of 15 per cent, which is as per government regulations. This increases the returns on the deposit, post-tax, from 6 per cent to approximately 7.4 per cent. India has entered into DTA agreement with 65 countries, including Australia, Bangladesh, Canada, China, Germany, Japan, Malaysia, Mauritius, Nepal, Singapore, Sri Lanka, the UAE, the UK, and the US.