Written by: Paras Nagpal, Business Consultant, GetMyCA
Reviewed by: GetMyCA Tax Team
Last Updated: 4 July 2026
Reading Time: 8 minutes
Quick Answer: Is NRO, NRE and FCNR Interest Taxable in India?
NRO interest is generally taxable in India. NRE interest is generally exempt in India for eligible non-resident account holders, subject to conditions. FCNR interest may also be exempt in specified cases, subject to eligibility and account type.
On this page
- NRO vs NRE vs FCNR quick comparison
- NRO interest taxability
- NRE interest taxability
- FCNR interest taxability
- AIS and Form 26AS checks
- Documents to review bank interest taxability
- Common mistakes
- NRE/FCNR(B) Exemption Review Checklist for NRIs
- ITR filing review
- FAQs
NRO vs NRE vs FCNR(B): Taxability Comparison Table
| Account Type |
Purpose |
Currency |
Interest Taxability in India |
TDS / AIS Review |
| NRO |
Indian income management |
INR |
Generally taxable |
TDS may be deducted and should be checked in AIS/Form 26AS |
| NRE |
Foreign income parking |
INR |
Generally exempt (subject to conditions) |
TDS may not apply where exemption conditions are satisfied; still verify bank certificate/AIS |
| FCNR(B) |
Foreign currency deposit |
Foreign Currency |
Generally exempt (subject to conditions) |
TDS may not apply where exemption conditions are satisfied; still verify bank certificate/AIS |
NRO Interest Taxability for NRIs
Interest earned on NRO accounts is generally taxable in India as "Income from Other Sources". Banks may deduct TDS on such interest, and the TDS credit should be checked in AIS/Form 26AS. NRIs should report this interest in their ITR and reconcile it with AIS and Form 26AS. If excess TDS has been deducted, a refund may be claimed subject to the final tax liability.
NRE Interest Taxability for NRIs
Interest on NRE accounts is generally exempt from tax in India under Section 10(4)(ii) of the Income Tax Act for eligible non-residents, subject to conditions. However, NRIs should still verify the exemption eligibility based on their residential status and account compliance. Supporting documents such as bank certificates and AIS entries should be maintained.
FCNR(B) Interest Taxability for NRIs
Interest on FCNR(B) accounts may be exempt under Section 10(15)(iv)(fa) of the Income Tax Act in specified cases, subject to eligibility conditions. Since these are foreign currency deposits, the tax treatment can differ from NRE accounts. NRIs should review bank certificates and AIS records to confirm the correct treatment.
AIS and Form 26AS Checks for Bank Interest
NRIs should review the following in AIS and Form 26AS:
- Interest credited by banks
- TDS/TCS deductions
- SFT reporting by banks
- Any mismatch between bank certificates and portal data
Documents to Review NRO, NRE and FCNR(B) Taxability
The following documents are generally useful for reviewing bank interest taxability:
- PAN card
- Passport and residential status details
- NRO/NRE/FCNR(B) bank interest certificates
- AIS and Form 26AS
- Bank TDS certificate / Form 16A (if applicable)
- Previous ITR acknowledgement (if any carry forward or adjustment is required)
Common Mistakes NRIs Make with Bank Interest Reporting
NRIs commonly make the following mistakes:
- Treating NRE/FCNR(B) interest as fully exempt without checking conditions
- Not reconciling bank interest certificates with AIS and Form 26AS
- Incorrect classification of interest income in ITR
- Ignoring residential status while claiming exemption
- Not maintaining supporting documents for audit or assessment
NRE/FCNR(B) Exemption Review Checklist for NRIs
Before treating NRE or FCNR(B) interest as exempt, NRIs should check:
- Whether residential status for the relevant financial year supports the exemption position
- Whether the account is correctly maintained as NRE or FCNR(B)
- Whether the bank interest certificate clearly identifies the account type
- Whether AIS/Form 26AS shows any interest or TDS entry that needs reconciliation
- Whether the account was continued correctly after any residential status change
- Whether supporting documents are available in case of future tax query
- Whether the applicable ITR form captures the bank interest treatment correctly
ITR Filing Review for Bank Interest Income
For NRIs with only bank interest income and no business or professional income, ITR-2 is generally used. If business or professional income also exists, ITR-3 may need to be considered.
For detailed guidance on ITR form selection, read our guide on ITR-2 vs ITR-3 for NRIs.
Need help with NRI TDS refund? Read our guide on NRI TDS Refund in India.
How GetMyCA Reviews NRI Bank Account Interest and Taxability
GetMyCA reviews bank interest certificates, AIS entries, Form 26AS, residential status details and applicable ITR form to assess the correct tax treatment of NRO, NRE and FCNR(B) interest. The focus is on proper classification, exemption eligibility (where applicable) and accurate ITR reporting.
Need help reviewing your NRO, NRE or FCNR(B) interest taxability? Visit our NRI ITR Filing in India page.
Author and Review Note
This article has been prepared by Paras Nagpal, Business Consultant at GetMyCA, and reviewed by the GetMyCA Tax & Compliance Team for tax-topic accuracy, source alignment and safe compliance wording.
GetMyCA recommends that NRI bank interest taxability should be reviewed with residential status details, bank certificates, AIS/Form 26AS and applicable Income Tax Act provisions before ITR filing.
Frequently Asked Questions
Q: Is NRO interest taxable in India?
Yes, interest earned on NRO accounts is generally taxable in India and should be reported in the ITR.
Q: Is NRE interest exempt in India?
NRE interest is generally exempt under Section 10(4)(ii) for eligible non-residents, subject to conditions. Supporting documents should be maintained.
Q: What is the tax treatment of FCNR(B) interest?
FCNR(B) interest may be exempt under Section 10(15)(iv)(fa) in specified cases, subject to eligibility. NRIs should verify the treatment based on account type and applicable rules.
Q: Should exempt NRE or FCNR(B) interest still be checked in AIS and Form 26AS?
Yes. Even if interest is exempt, NRIs should reconcile bank certificates with AIS and Form 26AS to avoid mismatches or future queries.
Q: How should NRIs report bank interest in ITR?
Interest should be reported under the correct head based on account type, and reconciled with AIS and Form 26AS.
Q: Can NRIs claim refund if TDS is deducted on NRO interest?
Yes, if the final tax liability is lower than TDS deducted, excess TDS may be claimed as refund after filing the correct ITR.
Q: Does change in residential status affect NRE/FCNR(B) tax treatment?
Yes, tax treatment can change if residential status changes. NRIs should review their status and account compliance every year.
Q: Do NRIs need to report exempt NRE or FCNR(B) interest in ITR?
If NRE or FCNR(B) interest is exempt, the reporting requirement should be checked based on the applicable ITR form, AIS entries, bank certificate and facts of the case. NRIs should keep supporting documents ready.
Sources
- Income Tax Department - Non-Resident Individual for AY 2026-27
- India Code - Income-tax Act, 1961: Section 10(4)(ii) and Section 10(15)(iv)(fa)
- RBI - Master Direction: Deposits and Accounts, for NRE, NRO and FCNR(B) account nature, permitted credits/debits and repatriation-related guidance
- Income Tax Department - File ITR-2 Online FAQs
- Income Tax Department return-form guidance and ITR form instructions for AY 2026-27
About the Author
Paras Nagpal
Business Consultant, GetMyCA
Email: paras@getmyca.com | Phone: +91 92174 87001
Disclaimer: This content is for educational purposes only. It is not personalized tax advice. Taxability of NRO, NRE and FCNR(B) interest depends on residential status, account eligibility, and individual facts. Please consult a qualified tax professional before filing or making any tax decisions.
About GetMyCA
GetMyCA Consultants Private Limited is a trusted business consultant based in New Delhi, serving clients across India since 2015. GetMyCA is helping entrepreneurs with hasslefree GST refund claims since 2018. Our team of qualified Chartered Accountants has successfully recovered stuck credits for businesses across pharma, footwear, corrugated box manufacturing, and ecommerce sectors.
Our Services: GST Registration & Compliance, Company Registration, Tax Consulting, Accounting Services, Business Compliance, FSSAI Licensing, MSME Registration, and specialized GST Refund Solutions.
Office: NS21, Basement, Mianwali Nagar, Near Peeragarhi Metro, New Delhi ; 110087
Connect With Us: