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I live in USA and have no income in INR. But I keep transferring money to my ICICI account. I want to open FD/RD in ICICI.

Q1: Which is better option and provide good returns between FD and RD ? Q2: Am I liable to pay income tax on the interest earned ? Or will I get interest after TDS deduction only ?

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    You might want to expand those abbreviations, since many of us may not recognize them. – keshlam Oct 2 '14 at 2:10
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    You need to add more information. Are you an Indian citizen whose status is, in Indian tax law, that of a NonResident Indian (NRI)? Or are you a former Indian citizen and thus are a Person of Indian Origin (PIO)? (You don't need a PIO Card or OCI Card) to have PIO status). Interest income earned by PIOs and other noncitizens of India in NonResident External (NRE) accounts is not taxable in India and is not subject to Tax Deducted at Source (TDS), but interest income in NonResident Ordinary (NRO) accounts is taxable in India. So, what kind of accounts do you have with ICCI? – Dilip Sarwate Oct 2 '14 at 3:11
  • Sorry, I did not provide sufficient info. I am an indian citizen and came to US last year and working on H1 visa. Right now my employer is an american company & I get my salary in $. I generally transfer $ to INR in my ICICI indian acct. This is not NRE or NRO account. So when I transfer money to ICICI acct. and get interest on that amount, then do I need to pay tax on that interest ? – Vaibhav Bhardwaj Oct 2 '14 at 22:02
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Q1: Which is better option and provide good returns between FD and RD ?

There is no right or wrong answer here and depends on rates, convenience, exactness of duration, etc and other things. In general an FD would give you better return than RD.

Q2: Am I liable to pay income tax on the interest earned ?

If you have a NRE/NRO account you are not liable for tax on interest in India. Note you may still be liable to pay tax on this in the US

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  • This is normal ICICI saving account. This is not NRO/NRE. Do I need to pay tax on interest earned on the amount deposited in my ICICI indian account. – Vaibhav Bhardwaj Oct 2 '14 at 22:06
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    You have to convert the Account into NRO account to enjoy the tax free benefit. – Dheer Oct 3 '14 at 7:10
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Recurring deposit means you put aside a sum every month to go into your RD account. Fixed deposit means you put aside a lump sum to go into your FD account. If we take investing 12,000 for RD, means 1,000 a month, and 12,000 for FD, means putting in 12,000 straightaway, we will definitely earn more from FD. However, if you do not have a lot of capital at the start, an RD is a good way to start saving in a disciplined manner.

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  • Please provide more explanation in your answer. Why will we "definitely earn more from FD" in your scenario? – dg99 Dec 12 '14 at 17:16

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