TYPES OF NRI ACCOUNTS

• 1. What are the types of NRI Accounts?

• There are various types of NRI Accounts that are available to an NRI Investor. Some of the major ones are-

1. Non-Resident Ordinary (NRO) Savings Account/ Fixed Deposit Account
2. Non-Resident External (NRE) Savings Account/ Fixed Deposit Account
3. Foreign Currency Non-Resident (FCNR) Fixed Deposit Account

• NRE Savings Account /Fixed Deposit Account:-

NRE Accounts are maintained in INR. This means that when you deposit the money in the NRE Account, the foreign currency is converted to Indian rupees at the prevailing foreign exchange rates. 1. It is mainly used to house your savings from income that you have earned abroad.

2. The principal amount, as well as the interest, are fully repatriable, i.e., transferable.

3. The interest income earned on the amount in an NRE account is non-taxable in India.

4. You can have other NRIs or Resident Indians (who is a close relatives as per Companies Act 2013) as joint account holders in NRE Accounts. In case Resident Indian is added as a Joint holder the mode of operation will be 'Former or Survivor'.

• NRO Savings Account/Fixed Deposit Account:-

• NRO Accounts are maintained in INR. This means that when you deposit the money in the NRO Account, the foreign currency is converted to Indian rupees at the prevailing foreign exchange rates. 1. It is used to house funds from your income that you have earned from India or abroad.
• 2. Income like rent, dividends, pension, etc. can be sent abroad through the NRO Account.
• 3. Repatriation is restricted from NRO accounts. You can repatriate just $1 million in a year from an NRO account with the help of a CA.
• 4. Interest income earned on the amount in an NRO Account is liable for TDS or Tax Deductible at Source.
• 5. You can have other NRIs or Resident Indians as joint account holders in NRO Accounts. In case Resident Indian is added as a Joint holder the mode of operation will be 'Former or Survivor',.

• FCNR Account:-

• 1. Foreign Currency Non -Resident Accounts have to be opened and maintained in foreign currency. 2. Your principal amount and the interest in an FCNR Account are fully repatriable, i.e., transferable
• 3. Interest income earned on your money in an FCNR account is non-taxable in India.
• 4. You can also opt for other products like NRE/NRO Current account, NRE Recurring Deposit RFC Savings/ RFC Deposits, etc.

• Who can open RFC account?

• A returning NRI who was resident outside India earlier and is returning now for permanent stay are permitted to open RFC account.

• What are the benefits of RFC accounts?

• The benefits of RFC accounts are:

1. In case of conversion from FCNR(B) accounts there is no exchange loss. Balance in RFC account can be used for local payments and can be remitted abroad for all bonafide purposes.
2. In case the NRI was residing abroad continuously for a period of 9 years out of the previous 10 years, then there will be no tax on interest earned on RFC accounts for the next 2 years. In the event of the returning Indian regaining NRI status, the balances in RFC account can be reconverted into NRE /FCNR(B) deposits.

• FAQs:-

• Can an NRI maintain multiple accounts with different banks in India, simultaneously?

• Yes, there is no prohibition to open and maintain multiple accounts.

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