Popular Accounts for NRIs in India: NRE, NRO, and FCNR
NRE (Non-Resident External) Account
Nature: External account, fully repatriable in foreign currency.
Purpose: Maintain funds in Indian rupees converted from foreign currency.
Types: Can be opened as savings, recurring, or fixed deposit accounts.
Tax Benefits: Interest earned is tax-free.
Usage: Funds can be used for spending in India. When repatriated, the amount is converted back to foreign currency, making exchange rates crucial.
NRO (Non-Resident Ordinary) Account
Nature: Resident account, not fully repatriable.
Purpose: Manage income earned in India, such as rent, dividends, etc.
Types: Can be opened as savings, recurring, or fixed deposit accounts.
Tax Implications: Interest earned is taxable, with TDS at 30%.
Usage: Any income arising in India must be deposited in an NRO account, not an NRE account.
Fund Transfer: Up to 1 million USD per financial year can be transferred from an NRO to an NRE account, subject to submission of Income Tax form 15CA (online self-declaration) and form 15CB (Chartered Accountant certificate). This ensures that funds are obtained legally and applicable taxes are paid.
FCNR (Foreign Currency Non-Resident) Account
Nature: Fixed deposit account in foreign currency (terms from 1 to 5 years).
Currencies: US Dollars, Pounds Sterling, Euro, Japanese Yen, Australian Dollars, and Canadian Dollars.
Interest: Lower than NRE accounts but tax-free.
Exchange Rate Advantage: No exchange loss as deposits are in foreign currency.
Transferability: Can be transferred to other NRE/FCNR accounts before maturity, subject to penalties for premature withdrawal.
Considerations for NRIs
Tax Compliance: Ensure compliance with Indian tax laws, including TDS obligations and proper documentation for fund transfers.
Repatriation: Understand the rules and limits on repatriating funds, especially from NRO to NRE accounts.
Exchange Rates: Monitor exchange rates for optimal conversion between foreign currency and Indian rupees.
Power of Attorney: If unable to manage accounts personally, issue a special power of attorney to a trusted person in India.
For more detailed information, NRIs can refer to the .
