Non-Resident Indians eager to increase their wealth are flocking to India to invest. You'll need a bank account as an NRI in order to conduct smooth investing transactions. If you're unsure whether you should create an NRE or NRO Savings Account or invest in an NRE/NRO Rupee or FCNR Deposit, keep reading to learn about the differences and which is ideal for you:
Non-Resident External (NRE) Savings Account
Currency — It's a rupee-denominated account where you can keep your foreign earnings. The deposit of foreign currency into this account is converted to Indian rupees at the current foreign exchange rate.
Permitted credits:
The interest generated on the account is referred to as permissible credits.
Maturity proceeds of investments transferred from another NRE Savings Account or FCNR(B) Account, provided that the investments were made from this account or through inward remittance.
Rent, dividends, interest, pensions, and other sources of income
Permitted debits::
Payments in rupees, such as utility bills, are permitted debits.
Transferring funds from one NRE Savings Account to another
Investing in India and sending money out of the country
Repatriable/Non-repatriable — It is fully repatriable, which means that both the principal and the interest earned can be transferred to another country. In addition, the interest earned is tax-free.
Non-Resident Ordinary (NRO) Savings Account
Only rupee deposits are permitted.
Currency - Use it to manage your revenue received in India.
Credits that are permitted:
Dividends, interest on savings, rent, pensions, and other sources of income produced in India.
Assets, including immovable property, purchased with rupee/foreign currency funding or as a legacy/inheritance are sold proceeds.
Money was transferred from other NRO accounts and remitted from outside India.
Debits that are permitted:
Payments in rupees are made locally, including payments for investments in India.
Transfer to another NRO account Remit money outside of India up to USD 1 million each financial year (total across all NRO accounts).
NRO money, on the other hand, cannot be used to open an NRE account or invest in FCNR Deposits.
Repatriable/Non-repatriable — While you can freely repatriate or transfer interest overseas, you can only repatriate the principal within specified limits. Furthermore, the NRO Savings Account interest is subject to Tax Deduction at Source (TDS).
Consider creating an NRO Savings Account if you want to keep your India-based earnings in India.
Similarly, if you want to relocate outside of India, you can convert your existing resident savings accounts into NRO savings accounts before you depart.
Foreign Currency Non-Resident (Bank) Account
The FCNR (B) account is a term deposit that can only be opened in freely convertible foreign currencies. 1 to 5 years of tenure.
Both the interest and the principal are freely repatriable, and the interest on the deposit is tax-free. Individual deposits of less than USD 1 million are eligible for withdrawals from the FCNR Deposits without penalty. Premature withdrawal of FCNR Deposits is also possible; however, keep in mind that interest will only be paid if the deposits are kept for at least one year.
On a 'former or survivor basis,' NRI and NRO accounts, as well as the FCNR (B) deposit, can be kept in joint names of NRIs/PIOs with a resident Indian.
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