Types of NRI Accounts for Indians: Decide Which One you need?
What is NRI?NRI means a non-resident Indian or an Indian citizen who stays abroad for a job, business or some for other circumstances.
What is NRI Support?NRI Support Services is a team of experts or an Indian NRI partners who work together for NRI around the world and provide them with customized solutions include tax planning, financial planning, asset management, real estate management and legal solutions to make their business in India easy, transparent and friendly, in the most ethical and compatible way.
Types of NRI AccountThere are many Types of NRI Account available and you may have to choose when deciding on your savings and investments. You can make an informed decision only when you have knowledge of the various options that are available to you. This will help you make sure that your money is better spent and generates better returns.
The available NRI bank accounts are:
- Saving Accounts
- Fixed Deposit Accounts
- Rupee Accounts
- Portfolio Investment Scheme (PIS)
- Trading Account
These are denominated in rupees and are specifically for NRIs. The following are the two options of NRI bank accounts offered by most banks in India:
1.Saving AccountsAs NRI you can open accounts in Indian Rupees (INR) or in a foreign currency. These can be in the form of savings accounts. NRI, can open both NRE or NRO accounts to keep their funds in India and abroad. If they select both accounts, while filling out the form, it will save them from the hassle of sending forms/documents repeatedly. The NRO and NRE accounts can be opened as the savings or fixed deposit account.
- Non-Resident External (NRE) Account: The NRE is intended for Indians residing abroad. It allows them to transfer foreign earnings easily to India.
Advantage:The main advantage of NRE account is that the money in this account can be repatriated and the funds in this account can be sent freely to another country. Money can also be transferred from an NRE account to an NRO account without any restriction.
Another great advantage of NRE account is that the interest earned from an NRE account is completely exempt from income tax.
An NRE account can be held jointly by more than one non-resident indigenous. A resident who owns a power of attorney cannot open an NRE account on behalf of an NRI, but that power of attorney holder can make local rupee payments on behalf of the NRI account holder.
If the non-resident Indian who holds the NRE account returns to India and becomes a resident of India, the NRE account becomes a regular resident account.
The following are the few important points with respect to the NRE account.
- A savings account to keep income earned outside of India.
- Get tax-free interests in India
- The principal amount and the interest earned are fully repatriable from India
- You cannot deposit Indian currency in this account so domestic credits are not allowed.
- There is no tax on the interest earned from these accounts. There is also no tax on the estate. That tax exemptions are available only for an NRE account maintained by an individual and not for those maintained by OCB (Overseas Organizations)
- The currency maintained in this account is Indian Rupee.
- You cannot open a joint account with an Indian resident but you can only with any non-resident Indian.
- You can easily transfer money to India.
- Non-Resident Ordinary (NRO) Account: An NRO account can be opened by NRIs. Like NRE account, the money in an NRO account is also maintained in Indian rupees. A regular bank account also becomes an NRO account if the account holder becomes an NRI.
Advantage:The biggest advantage of an NRO account is that it can be carried out in conjunction with another NRI or even with a resident Indian. However, the holder of a resident power (PoA) cannot open an NRO account on behalf of a non-resident Indian. But such a PoA holder can make local payments on behalf of the NRI.
If the non-resident Indian who owns the NRO account returns to India and becomes a resident of India, the NRO account becomes a regular resident account.
- The main difference between an NRE account and an NRO account is that the money cannot be repatriated from an NRO account. Therefore, the money held in an NRO account must be used only for local payments in Indian rupees.
- Funds/currency can’t be transferred from an NRO account to an NRE account.
- In the same way, an NRO account can only contain the money received from India. Interest earned on monetary aid in an NRO account is subject to taxes.
- A saving account is to manage your income obtained in India, such as income received from rents, dividends, pensions, etc.
- Repatriation from India only up to one million USD per financial year for good faith purposes, such as education, medical expenses, and similar expenses
- You can open this account with any Indian resident.
- The interest earned on this account is 30% subject to taxes and also included an applicable surcharge and the education process. It is applicable for both savings accounts and fixed deposit accounts.
- You can use this account to pay any invoice and expenses in India.
- You can deposit Indian currency (INR) in this account.
2.Fixed Deposit AccountsAs NRI you can open accounts in Indian rupees and/or in a foreign currency. These can be in the form of fixed deposit accounts.
- Foreign Currency Non-Resident Account (FCNR): If you are an NRI and want to maintain a fixed deposit account in India, you can opt for an FCNR account that allows you to save money earned abroad in foreign currency.
The following are the key points for the fixed deposit bank account in non-resident foreign currency (FCNR):
- All deposit (principal and interest) is exempt from taxes
- Open the deposit in conjunction with any other NRI.
- You are not allowed to make joint FCNR account with Indian residents.
- The following currencies are allowed in this account:
- American, Australian and Canadian dollars
- Pound sterling
- Japanese Yen
- You cannot deposit Indian currency in this account.
- The tenure can be permitted from at least of 1 year and a maximum of 5 years.
- The accounts of non-residents in foreign currency must be opened and maintained in foreign currency.
- Your principal amount and interest are completely repatriable and transferable
- Interest income earned from your money in an FCNR account is not subject to tax in India.
- NRE Fixed Deposits Account: The NRE account can be opened as savings and fixed deposit accounts. The following key points for the NRE fixed deposit account are:
- A term deposit account in Indian rupees (INR)
- The tenure can be from a minimum of 1 year to a maximum of 10 years.
- Obtain competitive exchange rates in the conversion of your foreign currency to INR.
- It very well may be financed with any convertible money.
- The interest earned is not subject to taxes in India.
- You enjoy the total repatriability of the investment, including interest with NRE Fixed Deposits Account.
- NRO Fixed Deposit Account: A term deposit account can be held jointly with residents and non-residents. key points for the NRO fixed deposit account are:
- The option of multiple tenures from 7 days to 10 years.
- The interest accumulated after deducting the tax in the present fiscal year is fully repatriable.
- Funds/currency in the NRO account can be repatriated up to 1 million USD per financial year for all good purposes.
- Obtain competitive exchange rates in the conversion of your foreign currency to Indian rupees. You can get a higher return after taxes by making use of the Double Tax Avoidance Agreement (DTAA) facilities.