6 NRI Account Benefits to Know
Reading Time: 2 Minutes
Key Takeaways: There are multiple accounts available for NRIs and each account has its own set of benefits. Read on to know more!
NRIs have many options when it comes to banking in India. Each of these options fulfil different financial needs.
There are three types of NRI accounts:
- Non-Resident External Account (NRE): While this account is maintained with funds originating from country of residence, the funds are held in INR.
- Non-Resident Ordinary Account (NRO): Ths is an account held in INR from income earned within India (e.g. rent, dividends, etc.)
- Foreign Currency Non-Resident Account (FCNR): NRIs or Persons of Indian Origin (POI) can make deposits in this account in any foreign currencies approved by RBI.
What are the benefits of having an NRI bank account?
- Convenient for managing your money: All NRI accounts have their purpose so you can manage your money from any source, from anywhere in the world.
- Remote and easy account opening: The documentation and process for opening an NRI account is completely hassle-free, and these accounts can be opened while staying abroad, which adds to their convenience.
- Beneficial for reducing tax liability in India: As per the Indian Income Tax Act 1961, an NRI may avail of tax-free interest earnings on NRE and FCNR accounts. As per the union budget 2020 proposal, these accounts would be taxable if the NRI does not have a tax liability in another country. However, amounts maintained in NRO accounts (both Fixed Deposit and Savings Account) are subject to taxes in India.
- Access to investments in India: The Fully Accessible Route (FAR) introduced by the RBI facilitates NRI investment in market-linked assets, allowing them to participate in the stock and debt markets in India.
- High returns: NRI accounts and fixed deposits offer attractive interest rates. The interest earned in NRE and foreign currency accounts is tax-free.
- Useful for repatriation: NRI accounts allow for the smooth movement of funds within India as well as overseas, making it convenient for NRIs who want their funds accessible from abroad and from India. An NRE account is fully repatriable, while funds in an NRO account are repatriable up to a limit of USD 1 Million in a financial year.
Who should open NRI Accounts?
NRI accounts are designed for the global Indian. All Indians living and working overseas can benefit from having an NRI account.
- NRIs with dependents in India: Funds can be made accessible to family members in India. Many banks offer competitive rates on remittances to India.
- NRIs who wish to participate in the stock market: NRI accounts facilitate investments in the Indian stock and equity market.
- NRIs who have income from the sale of assets in India: You can repatriate large amounts of money from the sale of property or investments in India back to your country of residence subject to the limits prescribed by RBI
- NRIs with local sources of income: An NRO account is ideal for those who have some form of earnings in India, even as they work abroad. They can use the account to remit these earnings abroad. Do note that any amount you deposit in an NRO account is subject to Income Tax in India and will require documentation.
Final Note: NRI bank account benefits are linked to the type of NRI account. For example, FCNR deposits allow you to hold your foreign earnings in foreign currency, protecting you from exchange rate fluctuations. NRO accounts are good to manage rupee earnings, while NRE accounts are ideal to remit funds to India.
Would you like to open all or any one of these NRI accounts instantly? DBS Treasures offers 40+ lifestyle privileges with an NRI account.Know more!
*TDS rates mentioned in this article are applicable as of April 2020 and will be subject to change as per changes in Indian Tax laws and regulations.
*This article is for information purpose only and is not a tax advice by DBS Bank. Sound professional advice should be taken before making any investment decisions. Bank will not be responsible for any tax loss/other loss suffered by a person actng on the above.