Tax break on NRI deposits restored

The government has withdrawn the income tax proposed on interest accrued or payable on deposits held by Non Resident Indians.

The Indian government has withdrawn the income tax proposed on interest accrued or payable on deposits held by Non Resident Indians, Minister of State for Finance S.S. Palanimanickam told the Rajya Sabha on Tuesday.

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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Several NRI organizations had raised the issue after the exemption was withdrawn in the budget for fiscal 2004-05 unveiled by Finance Minister P. Chidambaram in July.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.