NRIs: Key tax rules on Indian bank income

One of my children is living and working in Luxembourg as a permanent resident, while the other is a Green Card holder residing in the US. Both of them earn bank interest income from India.

- Ajay R. Vaswani

Are they required to pay tax on this Indian interest income in their respective countries? If so, can they claim any relief—either a rebate or credit—in their countries for the tax paid in India, or claim a rebate in India for taxes paid abroad?

—Name withheld on request

This is an important and common question for families with members living abroad. Since your children are permanent residents of Luxembourg and Green Card holders in the US, they are treated as tax residents in their respective countries.

This means your children are required to report and pay taxes on their global income—including any interest earned in India—in their respective country of residence. Here's how this works, broken down into three simple parts:

Taxation in India