I have an SBI NRO Savings account. On 30.03.24 and 30.06.24 Tax and Cess has been deducted in my above SB a/c. What is this and how to avoid

2 Answers 2


NRO accounts earn interest which is usually paid quarterly on the last date of each quarter. By law, 31.2% of the interest payment is deducted from the account and sent to the Indian Income Tax Authority as income tax withholding on your behalf. You might get some of the money withheld back if you choose to file an income tax return with the Indian Income Tax Authority, because the first Rs 10,000 of interest income is exempt from tax, and the rest is supposed to be taxed at 20% (plus the Health and Education CESS of 4%?). If the total income in India is small, the cost of filing an Indian income tax return can be much larger than the expected refund. Thus, some people with relatively small incomes in India forego the filing of a tax return in India.

As to the question about how to avoid this deduction, unfortunately, one cannot do so.


If you are a non-resident as per Indian tax law, bank will withhold 30% + SC (total 31.2%) tax from your NRO Interest payments. You can file a return in India & claim an adjustment/refund of this withholding. Filing timeline for FY 2023-24 return is July 31, 2024. By filing by this timeline, you can get refund of withholding done on 30.3.2024. For withholding on 30.6.2024 you will have to wait till next year & file a return then.

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