If I Become A Resident Of Indian After Two Years Of Opening An FCNR Account, Will The Interest Be Taxable?

FCNR Account Interest Is Exempted From Taxes As Long As The Account Holder Remains An NRI Under The FEMA Act. Now, In A Case Where The Account Holder Becomes A Resident, The Interest On FCNR Is Taxable; Henceforth, The Two Years' Interest Is Exempted From Taxes In India, But From The Third Year Onwards, Your FCNR Interest Will Be Subject To Taxes.

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Income Tax On FCNR Accounts In India

By Ritesh Jain |Last Updated: February 21, 2026

NRIs who wish to maintain a fixed deposit account in India can opt for an FCNR account. The account enables you to save money you have earned abroad in foreign currency in India. Most banks in India allow FCNR deposits in the following currencies: US Dollars, Pounds Sterling, Euros, Japanese Yen, Australian Dollars, and Canadian Dollars.

For a non-resident Indian, an FCNR account is an excellent investment option if they wish to retain their money in foreign currency and earn attractive returns. Now that your money in the FCNR account is held in a foreign denomination, there is no risk of exchange rate fluctuations on your deposits. This ensures the FCNR account offers high and risk-free returns.

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Mr. Ritesh has 20 years of experience in taxation, accounting, business planning, organizational structuring, international trade financing, acquisitions, legal and secretarial services, MIS development, and a host of other areas. Mr Jain is a powerhouse of all things taxation.

Frequently Asked Questions

No, A Resident Indian Cannot Open An FCNR Account In India. An FCNR Is Exclusively For NRI And OCI Cardholders.

No, The Interest You Earn From An FCNR Account Deposit Is Tax-Free As Long As You Sustain Your NRI Or RNOR Status.

With Respect To The Existing Income Tax Rules, No TDS (Tax Deducted At Source) Applies To FCNR Accounts. This Happens Because These Term Deposits Are Tax-Exempt.

Yes, Money Can Be Transferred Between An NRE Account And An FCNR Account. When You Open Your FCNR Account, You Can Transfer Your Money From Your NRE Account.

Interest Earned On A Foreign Currency Non-Resident Account Is Tax-Exempt Under Section 10 (15)(Iv)(Fa) Of The Income Tax Act.

Income Tax On FCNR Accounts In India

Frequently Asked Questions

Can A Resident Indian Open An FCNR Account?

Are FCNR Accounts Taxable In India?

What Is The TDS Rate For FCNR Accounts?

Can I Transfer Money From My NRE Account To My FCNR Account?

Under Which Income Tax Act Section Is FCNR Interest Exempt From Taxes?

Income Tax On FCNR Accounts In India

Frequently Asked Questions

Can A Resident Indian Open An FCNR Account?

Are FCNR Accounts Taxable In India?

What Is The TDS Rate For FCNR Accounts?

Can I Transfer Money From My NRE Account To My FCNR Account?

Under Which Income Tax Act Section Is FCNR Interest Exempt From Taxes?