r2i forum

kallu;91966I am a citizen of India living in USA on H1B visa - I am a resident of USA for tax purposes.

I have some NRO/NRE CDs of various maturity dates ( 1yr, 2yr, 3yr etc. ) and some savings accounts in India in 2007.
The interest from these accounts was my only income in India.
30% tax was deducted at source by the bank on some of the CDs and no tax was deducted at source on some other CDs. The tax year in India runs from Apr 2007 - Mar 2008. So, I will be filing the tax return for India after Mar 2008. The final effective tax that I will end up paying to India on these CDs will be probably less than 30% due to standard deductions etc. that I can claim on the Indian tax return.

I am planning to report the interest on the CDs and savings account on 1040 and then file F-1116 to get foreign tax credit. Considering the fact that the tax return will be from Mar07 to Apr08, how do I calculate the foreign tax on the these CDs and savings account in just 2007? Do I prorate the tax from the Indian tax return over the income in Mar07-Dec07?

PS: Administrator, I spent 3-5 hours on this board and other forums but could not find the answer to this question. Please do not move this post to 'silly questions' etc. thread.[/quote]

What is the amount of NRE interest?
What is the amount of NRO interest?
How much was TDS?

More questions later if they become relevant.

Added Later

You state that interest is your only India source income. NRE interest is exempt from India tax. If the NRO interest in 2007-08 is 1.1 lac rupees or lower, then your final India tax liability for the year is zero, even though NRO interest suffers TDS - the entire TDS can be claimed as refund from GOI - in which case no foreign tax credit can be claimed from IRS.

The above scenario has been dealt with in other threads and does not warrant a separate thread. I responded because

(i) Your NRO interest may exceed 1.1 lacs
(ii) Even if your NRO interest does not exceed 1.1 lacs, this thread can be used to deal with less simple FTC situations that have not been dealt with in other threads - particularly the issue of how to deal with Indian fiscal year being different from calendar year.

Bobus;91987What is the amount of NRE interest?
[/quote] ~100 USD

Bobus;91987What is the amount of NRO interest?[/quote] ~500USD. But next year, it will increase to ~3-4K USD. Is the reporting different by amount? I remember reading that 1116 isn't reqd. if tax withheld is < 300USD .

Bobus;91987How much was TDS?
[/quote] 30% on NRO CDs and savings accounts. 0% on NRE CDs and accounts