Now-a-days it has become very common that people from one country move out to other countries for jobs and starting businesses. Those who move out of the country can open a special account in India for money transaction and get benefitted out of it. What are all bank accounts a NRI (non-resident Indian) can open here? Here are the details about NRI accounts in India.
Types of NRI Bank Accounts Available in India
If the account is based on Indian currency, then the accounts such as Non-Resident Ordinary A/c – NRO or Non-Resident External A/c that is NRE account can be started. If you are intended to start the account based on foreign currency then you can open FCNR account (Foreign Currency Non-Resident account). Here are the type of NRI accounts in detail.
What is NRO Account? Benefits and Procedures
This account can be started when becomes a NRI or even before becoming an NRI. This account will be started and maintained in Indian currency. NRO account can be opened as savings or as a deposit. After one becomes an NRI, he or she can convert their ordinary account into an NRO account. This account can be started as joint account along with another NRI.
A power of attorney can operate this account and nominee facility is also available. The money in this account will be only in Indian currency (rupees) and can be spent only in India. We cannot carry the money from this account to any other country. Money transaction cannot be done between one NRI account to another NRE account. Every year, a NRI can transfer up to 1 million US Dollars from foreign countries to their respective NRO account according to RBI’s instruction. Any revenue generated through a NRO account is taxable income. So, NRI must pay the income tax subject to the limits of their income. The NRO account can be converted back as an ordinary savings account once when the NRI is becoming an Indian citizen.
NRO account is suitable for NRIs who wish to have money transactions only in Indian currency and is willing to transact about one million US dollars in a year.
What is a NRE Account? Procedures and Benefits
This account can be opened only after becoming a NRI. This account also can be started only through Indian currency. The account can be opened either as savings account or as deposit account. NRE account can be opened individually, for a joint account it requires to be opened through another NRI. This account can also be operated through power of attorney. Nominee facility is also available.
Money from this account can be changed to foreign currency, which means through this account you can exchange the money to the currency value of any country. Similarly, you can receive money into this account through any foreign currency. Money can be transferred from one NRE account to another NRO account.
Revenue received through this account is not taxable. As the NRI comes back to India, this NRE account can be used as a normal savings account. If any NRI needs a tax free income and willing to exchange any foreign currency can choose to open NRE account.
What is a FCNR Deposit? Procedures and Benefits.
A NRI starting an investment through foreign currency is called FCNR deposit. It is possible to directly deposit US Dollar, Japan Yen, Euro, and sterling pounds into this deposit. Investments can be made for minimum of one year and maximum of five years. As the deposit matures, the principle amount and the interest will be given to you in the same currency value that you have made the deposit. The revenue earned through this deposit is not a taxable income.
One who doesn’t need his revenue to be affected by the changes in foreign investments and need not wants to pay tax can opt this FCNR account which is suitable for them. The above three accounts are the types of NRI accounts available and one can choose the proper account as per their needs, profit and convenience.