The first thing they do when one moves out of India is to open a bank account for themselves as non-residents in India. To be right, by doing so, they will have a whole lot of advantages. Plus, opening and running one of these accounts with banks in India is very convenient. The prerequisite is simple KYC records, plus evidence that you are an NRI.
The ideal NRI account is:
- FCNR account or A Foreign Currency Non-Resident Account.
- NRE Account or A Foreign Currency Non-Resident Account
- NRO Account or A Non-Resident Ordinary Account
FCNR Account
The FCNR account is an account that can only be opened in an Indian bank with a foreign currency, as the account name implies. For a year to five years, this form of account may be opened. No deposits can be made into this account in the form of the Indian Rupee. On this account, regular interest is paid by the bank. This is a kind of account with daily interest credits with a fixed deposit.
The rate of interest depends on the currency and the account's tenor. The account holder is exempt from the possibility of currency fluctuation for this form of account because the money is kept in foreign currency only. The United States Dollar, British Pound, Euro, Japanese Yen, Australian Dollar, and Canadian Dollar are the acceptable currencies.
NRE Account
The NRE account is an Indian Rupee denominated account, which is freely Repatriable. This type of NRI bank account may be in the form of deposits that are investments, present, revolving, or fixed. It is considered that the revenue is received outside India. Indian Rupees cannot be put into this account; it is only possible to deposit foreign currency, which will be converted at the time of deposit into Indian Rupee. At the end of the year, the interest gained on the balances is free of any income tax. The NRI can, however, send its remittances into this form of account from abroad. At their determining rates, the bank pays interest on the balance.
NRO Account
The NRO Account is in Indian Rupee and can take the form of savings, current, recurring or fixed deposits. The same as the account at NRE. The distinction between NRE & NRO is that the income is considered to occur or accrue within India in the NRO. Since the income is deemed to be within India, the same taxes follow. The applicable tax is the tax deducted from the source or withholding tax in compliance with the Indian tax laws and regulations. You can deposit Indian Rupees into this account. The NRI may send its remittances to this NRI savings account as well.