Q641. Repatriate bank interest income to UK from India

Question: Hi, I am British citizen. my parents were born in India however they do hold British passports. I hold an OCI card and I believe I am eligible for a NRI account with most Indian banks . My question is, if I was to deposit and fix a given sum into an Indian account, can I use that interest earned in the UK? I am assuming I must declare the interest as earnings here in the UK? thanks, Sukh.

Answer: Current income such as rent, interest and dividends earned in India can be legally repatriated abroad. That said, repatriation requires some paper work and depending on the amount in question, it may not be worth the effort to repatriate just interest income. While interest rates in India may be higher on bank deposits, keep in mind that currency fluctuations may effect the final outcome of earnings. For instance if Indian currency depreciates against UK currency, then while converting currency for repatriation your interest income may turn out to be less than expected! Interest earned in India and sent to UK will be income for UK tax purposes and subject to UK taxation.