How do taxes work for an NRI?

[noideawhatiamdoing]

I am an Indian living in the USA. I have general savings accounts in India which I am planning to get converted to NRO accounts. However, I have a few questions:

1. I read that the money in NRO account will be taxed. Is this true? OR just the income will be taxed?
2. How will GOI know my income? Let's say I have some investments in MF through my NRO account. I also have a DMAT account for share trading which is linked to this NRO account. How will they know how much I earned.
3. Is tax automatically deducted from these NRO accounts?
4. Is it true that I cannot use an NRE account for above purposes (DMAT and MF) since any kind of payback from these(Dividends, Interests, etc) can't be credited to NRE account as it does not accept deposits in INR
5. Do I have to file tax returns if I have income in India through MF and DMAT?
6. Do I have to file tax returns if I have income in India just through interest on a savings account?

Thanks in advance for your suggestions.

 

[missionaryadvocate]

@noideawhatiamdoing You should consult some one, such queries are difficult to ans on msg/comments.

As you are an NRI, any money earned or deemed to be earned in India is taxed in India and accordingly you have to pay tax and file Tax Returns.

1. Interest is deemed to be earned in India. Any money deposited in NRO account doesn't becomes taxable.
2. The Bank, NSE/BSE and your Broker submits a report to Govt stating your activities and balance and etc. Hence, the Govt will get to know.
3. On interest, Yes.
4. NRE (Deposit in FC and withdraw in INR. Source= https://www.axisbank.com/progress-with-us/save/difference-between-nro-and-nre)
   
   I can't confirm your info, but it seems a banker would be better to ans this.
5. Yes.
6. Yes. Being a NRI, you don't get benefits and have to file return and pay tax on all income earned in India.

 

[noideawhatiamdoing]

@missionaryadvocate Thanks a lot for your answer! I know I need to discuss these in person with a professional to get better clarity, but your answers help nonetheless.