how to handle the Indian interest income and Indian taxes paid on that income?



I am a US citizen. Have a NRO account in India, which earns small interest. Indian banks deduct income taxes at source. What is the best way to handle the Indian interest income for US taxation as well as taxes paid to India on that interest income?

I am sure many other NRIs have faced this situation. Any help is welcome, and thanks in advance.

how to handle the Indian interest income and Indian taxes paid on that income?
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4 Replies to “how to handle the Indian interest income and Indian taxes paid on that income?”

  1. For persons whose income is not taxable in India or whose income is below taxable limit, there is one Form 15H which depositor should submit to bank. On receiving this form bank will not deduct tax.


  2. You include the GROSS interest income on your US return. You attach Form 1116 to take the credit for the foreign taxes paid, including any withheld at the source. The allowable credit is the lesser of the foreign tax paid or what the US would have collected on the income.



  3. Any earning in India by way of interst,rent,trading of shares or of any other type
    is taxable as per IT Act.In case of interest on deposits you can furnish Form no.15 G
    to the bank & they will not deduct TDS if you have PAN also.It is advisable to file
    IT return every year & seek the refund of TDS already deducted.You can entrust
    this work to some CA in India at a very nominal charges.Also take PAN (Permanent-
    Account Number) if not having already thru CA only.
    You can claim refund in US if you have paid double tax on the same income & the
    same is available in India also as per bi-lateral agreement.





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