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NRI Bank Accounts – NRE, NRO, FCNR

NRE (Non-Resident External)and NRO (Non-Resident Ordinary) accounts are popular with NRI. While the NRE is an external account and is repatriable in foreign currency, the NRO is the Resident account and cannot be repatriable.

NRO and NRE Account can be opened as a Savings, recurring, or fixed deposit account. Interest earned on NRO is taxable and TDS @ 30% applies to it. NRO Account is maintained in Indian rupees to manage income earned in India say Indian Income like rent, dividend, etc. As an NRI, if you have any income arising in India, you can deposit it in an NRO Account only, not into an NRE account.

Interest earned on NRE is tax-free. NRE account is maintained by converting foreign currency into rupees. Money can be used to spend in India. When the NRE accounts are needing to be repatriated, the amount in rupees is converted back to foreign currency. Hence the currency rates at the time of conversion to rupees and back into foreign currency are factors to consider.

Money can be transferred up to 1 million USD per financial year from a NRO to a NRE account after submitting Income Tax form 15CA (online self declaration) and form 15CB (Chartered Accountant certificate). The forms are to ensure remittance is from NRO funds that have been obtained by legal means and applicable tax is paid. Since remittance involves foreign currency, it is governed by the FEMA and RBI regulations and the formalities are handled by Authorized Dealers (banks).

FCNR (Foreign Currency Non-Resident) account is a fixed deposit (periods from 1 to 5 years) foreign currency account that allows non-residents to keep their deposits in foreign currency and the . permissible are US Dollars, Pounds Sterling, Euro, Japanese Yen, Australian Dollars, and Canadian Dollars. They get lower rates than NRE accounts and interest like with NRE is tax-free. Since there are in foreign currency, there is no exchange loss of conversion from rupee to foreign currency. These accounts can also be transferred to other NRE/FCNR accounts before the maturity period subject to penalties for premature withdrawals of the deposit.

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