New Delhi: If you are a Non-Resident Indian (NRI), you cannot maintain a regular savings account in India. Instead, banks offer specialised accounts to help you manage your financial transactions smoothly. The two primary options available are the Non-Resident External (NRE) Account and the Non-Resident Ordinary (NRO) Account. Both accounts can be held simultaneously and usually come with a minimum balance requirement.
NRE Account
An NRE account is meant for NRIs who wish to deposit their foreign income in India. A key benefit is that both the principal and the interest earned are completely tax-free under the Income Tax Act, 1961.
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Funds in an NRE account are fully repatriable, which means you can transfer both the principal and interest back to your overseas account without the need for a chartered accountant’s certificate.
Eligibility is limited to NRIs and Overseas Citizens of India (OCI). The account may be opened individually or jointly with another NRI/OCI, or with a resident Indian on an “either or survivor” basis. Banks allow NRE savings, current, fixed deposit, and recurring deposit accounts.
NRO Account
An NRO account, on the other hand, is designed for managing income earned in India, such as rent, dividends, pension, business income, or interest. Unlike an NRE account, the income in an NRO account is taxable in India as per the account holder’s applicable tax slab.
Repatriation from an NRO account is restricted and subject to certain limits, making it less flexible than an NRE account. Similar to NRE, you can open savings, current, or deposit accounts, either individually or jointly.
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