Q&A: tax sparing relief for bank interest on foreign savings account

In this week’s Q&A, Stuart Farmer, apprentice tax advisor at Croner-I, explains that a UK resident in receipt of interest payments from saving account in India may not be liable for tax due to double taxation agreement

 

My client is a UK resident under the statutory residence test (SRT) but a non-resident Indian (NRI) in India.

He is in receipt of interest from a savings bank account in India called a non-resident external account (NRE). This interest is not subject to tax in India due to a special form of relief.

He has been told by a relative that he can still receive tax credit in the UK despite no tax being paid to the Indian tax authorities, can you confirm if this is the case?

In short, yes, the client can still claim the relief despite not being taxed twice.

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