10 year limit for tax spared relief on NRE deposits interest

Hello, Interest received on NRE deposits of Indian banks receive a "tax spared" relief of 15%. But I am confused with the time limit of 10 years upto which such relief is provided. My NRE account was opened in December 2017 with HDFC Bank India, but this year 2023-24 is the first time when it will receive interest, on which I will seek to deduct the 15% relief. Can I continue to claim such relief till 2027-28 or 2034-35? If I want to claim such relief afterwards too, is it sufficient to move my funds to a new NRE account say with Axis Bank India. Any help and pointers appreciated, thank you.

Hi
Although NRE interest income is not taxable in India NRE interest income has often been mistaken as non-taxable in the UK this is incorrect, UK tax residents are subject to UK taxation on their worldwide income and gains subject to any remittance basis claims.
Under the UK-India Double Tax Convention, NRE account interest taxable in the UK can receive credit for Indian tax even if this has not been paid as the credit relief amount is calculated through the tax spared mechanism, which deems Indian tax to have been paid at the marginal rates applicable there. (UK-India DTC notes page HMRC’s Double Taxation Relief Manual DT9553).
Under the UK-India Double Tax Convention, NRE account interest taxable in the UK can receive credit not exceeding 15% for Indian tax even if this has not been paid.
UK tax relief not exceeding 15% is available for ten years from the opening date of the NRE account per Article 24(5) UK-India Double Tax Convention.
NRE interest income should be declared within an in individuals UK self-assessment return.
 

If I opened my first account in 2012/2013 the last year I can claim for this will be 2022/23. if opened another account in 2019/20 does this mean I can apply the 10 year rule for this account too and claim tax sparing relief up to 2029/30? Thank you

Hi,

Yes, the 10 year limit applies to that source, so as this is a new account the 10 years starts again for the new one.

Thank you.

Dear HMRC, I have been an NRE account holder in India since 2006. Post the 10-year mark in 2017, I understand that the interest income from this account no longer qualifies for tax sparing relief. Consequently, I opened a fixed deposit for Rs. 10 Lakh, transferred from the NRE account, with a 5-year maturity period, accruing interest at a rate of 7% per annum cumulatively. I seek your guidance on a specific query: Am I eligible to claim a 15% notional tax credit against the interest income accrued annually from this fixed deposit on my UK tax return? It's my understanding that notional credit considerations apply distinctly to each source of income, hence my query focuses on the fixed deposit derived from the NRE account, not the account itself. I appreciate your assistance in providing clarity on this matter to ensure compliance with UK tax regulations.

Dear HMRC, I have an query about sparing tax relief. I have a NRE account which was opened in April 2014 so nearly 10 years back. I also fixed my money for a period of 10 years which will be maturing soon. I haven't claimed or declared any interests from the fixed deposits as the money hasn't been paid out. Will I be eligible for 15% sparing tax relief on the total interest amount upon maturity, when I do my self assessment for FY 24-25? Appreciate your assistance.

Hi,
The 10 year tax relief of 15%, whether tax us paid or not, is only available for NRE accounts.
Any other account will only qualify for tax relief, if tax is paid on the interest.
Thank you.
 

Hi, NRE accounts have 2 types - Savings and Fixed (Term) Deposit. My question is if Savings account is more than 10 years old but Fixed Deposit is less than 10 years, can I claim foreign tax relief on tax-spared basis on Fixed Deposit account? Please note both accounts are with same bank but fixed deposit account was opened in much later date to lock funds in return of higher interest rates. Please let us know.

Hi Prakash Chawla,
Under the UK-India Double Tax Convention, NRE account interest taxable in the UK can receive credit not exceeding 15% for Indian tax even if this has not been paid. 
UK tax relief not exceeding 15% is available for ten years from the opening date of the NRE account per Article 24(5) UK-India Double Tax Convention. 
NRE interest income should be declared within an in individuals UK Self Assessment return.
It can be claimed in respect of ONLY that account.
Foreign Tax Credit Relief would only be due on the other account if in fact tax has been deducted and there is UK liability
Thank you.