Moving to a new country garners many changes. This entails the way you handle your funds back in your homeland. Your regular resident account cannot help you with such transactions. You need a Non-Resident Indian or NRI Account to facilitate them. It is a banking facility designed for global Indians. It allows such individuals to park and manage their foreign earnings freely.
It lets them partake in investment activities in India. Besides, this account comes in three distinct types. We will cover what you need to know about a Non-Resident External or NRE Account.
Repatriation
An NRE Account offers full repatriation. You are allowed to transfer the funds in your account to another foreign account freely. Moreover, you can even send money to your dependent family members in India. The transferred amount will be credited in INR. So, you need not worry about conversion.
Rupee-denominated
The account is Rupee denominated. This implies that it maintains all your deposits in INR. Whether an NRE Deposit or Savings Account, this feature stays consistent across all types.
Fund maintenance
Funds from another country or transfers obtained from another NRE or Foreign Currency Non-Resident Account are maintained in the account. However, the currency in which the money stays in your account is INR. You can transfer money from your NRE to an NRO Account. The process involves no restrictions.
Joint facility
You can opt for a joint holding if you have financially dependent family members in India. But keep in mind that the resident Indian should be related to you. Proof of the same should be presented when applying for this facility.
Transfer rules
A Power of Attorney cannot open an NRE Account on the NRI’s behalf. However, they can make local rupee payments and Money Remittances on the NRI’s behalf. There is no imposition on such transactions.
Conversion
Sometimes, people move overseas for a brief period. They may not extend their stay for whatever reason. In such cases, they can convert their NRE Account into a regular resident account. The process for such conversion varies from bank to bank. Therefore, checking this before you open an NRE Account online is wise. It saves you from inconvenient situations.
Tax benefits
One of the many reasons why NRIs opt for this account is its taxation policy. Under the Income Tax Act 1961, the interest accrued through frequent deposits is tax-exempted. This allows the holder to optimise their interest earnings without any worries.
Tips to consider before opening an NRE Account
- Always opt for a reliable banking partner to enjoy a seamless banking experience
- At the time of opening the account, ensure to not miss out on relevant proofs
- Miscellaneous documents like photographs should not be neglected
- Your Power of Attorney, if any, should be an Indian resident
