Introduction to NRI Accounts : NRE, NRO & FCNR Accounts
Sunday, Feb 06, 2011
If you are a person of Indian origin but living
abroad for employment or educational purposes,
then chances are that you require an NRI account
or a Non resident Indian account to send money to
India so that your loved ones can use the same.
Such accounts can be used for both investments as
well as saving purposes by those who are non
resident Indians. Commonly used NRI accounts to
transfer money to India by people living abroad
are the NRE, NRO and the FCNR accounts.
NRE or Non Resident External account is an account
that allows you to deposit all money coming in
from sources abroad, which could be a savings
account or a fixed deposit account. Do remember
that once you send money to India as foreign
currency, which gets deposited in such an account,
it gets converted and is held as Indian Rupees.
However, the amount so deposited in this account
is fully repatriable.
FCNR or Foreign Current Non-Resident accounts are
those where money can be held in the form of
foreign currencies, namely US Dollar, British
Pound, Euro, Yen, Canadian Dollar and Australian
Dollar. However, when you send money to India via
such an account, it will be held in the form of
fixed deposits, where the minimum period is twelve
months.
NRO or Non-Resident Ordinary accounts are
essentially Rupee accounts, where you can hold all
Indian income coming in from funds generated
within the country. However, the amount held in
this account is non repatriable.
While opening such NRI accounts, remember that
while the NRO account can have a joint account
holder who is a resident Indian, the other two
types cannot have an Indian resident as a joint
holder. However, you can opt for another NRI to
become a joint holder. In case of the NRE account,
however, it is possible to appoint a mandate or an
authorized representative who can look after the
account. Such an authorized person can be an
Indian resident
The option of using NRI accounts to transfer money
to India is very easy, fast and convenient. Most
banks offer easy and fast remittance services,
which ensure that your bank in India receives the
amount almost immediately after it is transferred.
Alternatively, if speed is not your concern, then
you can opt to send money to India through Drafts,
Checks, International Checks and International
Money Orders etc.
It is important to note that when you send money
to India to an NRE or FCNR account, the amount so
deposited are exempt from taxation in India.
However, they could be taxed in the country of
your stay. Therefore, make sure that you are aware
of the exact rules regarding taxation of NRI
accounts before you opt for NRI accounts to
transfer money to India.
It is also important to note that any money gained
through pension or sale of property in India can
be repatriated, provided you have paid the
requisite local taxes that the amount is subjected
to. While payments made through other accounts
require confirmation from the RBI regarding such
payment of taxes, it is not so with NRE accounts.
In other words, if you transfer money to India
into a NRI account for purchase of a home and then
sell it, the money can directly be repatriated to
your home country, without RBI confirmation.
However, be sure that you have all the relevant
papers to prove your case.
So, if you want to transfer money to India, you
can consider NRI accounts as an effective
alternative.
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