I have an NRE account in India and a UK bank account here as I am a British Citizen and OCI. As Interest rates in Indian banks are far better than in UK, I plan to have Fixed Deposit in NRE account from the money I transferred from UK account(taxes paid in UK) to my NRE account. Once the FD has matured, Over a period of time I want to get my money back to UK. I understand all interests accumulated will be Taxed here in UK and I would want to pay the taxes incurred with Interest, but if i get the money back into UK account in small installments, how do i breakdown the amount of the interest+amount transferred in these circumstances so that I pay taxes only for the Interest amount.

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    The better interest rates in India just mean that the markets expect the rupee to fall against the pound. So you probably won’t end up with more money from keeping your savings in India, unless you can find a sterling-denominated account that pays Indian interest rates.
    – Mike Scott
    Aug 24, 2020 at 6:47
  • It's a very risky strategy to trade in currencies, which is what you're doing. Sure India has higher interest rates but the currency is also much weaker and can likely fall which will wipe out any gains that you may have thought that you'd accumulate. The other thing to keep in mind is that you will lose money both ways when you transfer GBP to INR and vice versa. This is because banks have a spread when they do currency conversion.
    – nikhil
    Aug 24, 2020 at 18:10

1 Answer 1


Taxes are due when earned. Not when you transfer the funds to UK. So even if you never transfer the funds you have to declare in your UK taxes interest every year and pay taxes.

Generally there is relief under DTAA (Dual Tax avoidance agreement) however in this case there is no taxes applicable in India so you have to pay as per UK tax rates.


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