The Statutory Brief

IT Act 1961 → 2025 / Section 10(4)(ii)

Exemptions

Section 10(4)(ii) → Schedule IV

Tax-free interest on NRE accounts

Section 10(4)(ii) of the old Income-tax Act, 1961 · new Schedule IV under the Income-tax Act, 2025

New reference Schedule IV, Table Sl. No. 1

Income-tax Act, 1961Section 10(4)(ii)

  • Interest on NRE account exempt for non-residents (and RNORs in some cases)

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Schedule IV, Table Sl. No. 1

  • Schedule IV (income of non-residents), Table Sl. No. 1

Applies from tax year 2026-27 (from 1 April 2026).

What changed

Moved from section 10 into Schedule IV.

Practice notes

  • Interest becomes taxable once the person turns resident (ordinarily resident); redesignate the account.

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

Is NRE interest tax free under the new Income Tax Act 2025?

Yes, under Schedule IV, Table Sl. No. 1, for eligible non-residents.

What is section 10(4)(ii) called in the new Income-tax Act, 2025?

Section 10(4)(ii) of the Income-tax Act, 1961 corresponds to Schedule IV, Table Sl. No. 1 of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).

What changed in section 10(4)(ii) under the new Income Tax Act?

Moved from section 10 into Schedule IV.

Is section 10(4)(ii) still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 10(4)(ii) of the 1961 Act. Schedule IV, Table Sl. No. 1 of the 2025 Act applies from tax year 2026-27.

Related sections

6→6Residential status of individuals: resident, non-resident, deemed resident115A→207Tax on dividends, interest, royalty and FTS of non-residents and foreign companies194A→393TDS on interest other than interest on securities (FD, RD, loans)